The natural rate of unemployment includes frictional,cyclical,and structural unemployment.

Natural Rate

The unemployment rate or level of activity achieved in an economy when it is at full employment, without accelerating inflation.

Unemployment

The situation in which individuals who are capable of working are actively seeking work but are unable to find employment.

Cyclical

Pertaining to fluctuations in economic activity occurring due to the natural business cycle, including expansions, peaks, recessions, and troughs.

Differentiate between types of unemployment and their relation to the economy's potential output.

Verified Answer

Final Answer :

False

Explanation :

The natural rate of unemployment includes only frictional and structural unemployment, not cyclical unemployment.

Learning Objectives

Differentiate between types of unemployment and their relation to the economy's potential output.