When the Actual Unemployment Rate Is Equal to the NAIRU

question 82

Multiple Choice

When the actual unemployment rate is equal to the NAIRU, we can say that

• A)frictional and structural unemployment are both zero.
• B)frictional unemployment is zero.
• C)the economy is experiencing no lost output due to frictional unemployment.
• D)all remaining unemployment is structural.
• E)the economy is at full employment.

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Definitions:

Disinflation

A decrease in the rate of inflation, indicating a slowdown in the rate at which prices for goods and services increase.

Rate of Inflation

The rise in the average cost of goods and services across an economy over a specific period.

Recessions

Periods of economic downturn when output and employment are falling, typically defined as two consecutive quarters of declining gross domestic product.

Consumer Price Index

An index that calculates the overall average price of a range of consumer goods and services, which includes transportation, food, and healthcare provisions.