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    Question

    The natural rate of unemployment corresponds to:

    A Frictional and structural unemployment Correct Answer Incorrect Answer
    B Zero unemployment Correct Answer Incorrect Answer
    C Socialist Correct Answer Incorrect Answer
    D Full employment with no labor market rigidities Correct Answer Incorrect Answer

    Solution

    Solution: The natural rate of unemployment (NRU) is the unemployment rate when the economy is at full employment, i.e., no cyclical unemployment. It includes frictional (short-term job search) and structural (mismatch of skills) unemployment.

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