To determine the type of
Explanation of Solution
The unemployment rate that occurs from the effects of structural unemployment and frictional unemployment is considered the natural rate of unemployment.
Natural rate of unemployment = structural unemployment + frictional unemployment.
The natural rate of unemployment is the normal rate of unemployment at which the actual rate fluctuates.
Therefore, option “d” is correct.
The other options are incorrect because the frictional unemployment rate, structural unemployment rate, and cyclical unemployment rate are part of unemployment as a whole in an economy. The term maximum unemployment is ambiguous as it will differ according to the economic situation such as the maximum unemployment rate in the short run will be different from the maximum unemployment rate in the long run.
Chapter 3R Solutions
Krugman's Economics For The Ap® Course
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