Question

The natural unemployment rate includes

		structural but not frictional
		neither frictional nor structural unemployment
		both frictional and structural unemployment
		frictional but not structural

Answer 1

Natural unemployment, or natural rate of unemployment, is the unemployment rate that persists in a well-functioning, healthy economy that is considered to be at “full employment.” It is a hypothetical rate of unemployment and suggests that there is never zero unemployment in an economy.

In other words, the natural rate of unemployment includes only frictional and structural unemployment, and not cyclical unemployment.Frictional unemployment occurs when workers are “in-between jobs,” i.e., when people in the workforce are looking for jobs but are unable to find one yet. It includes recent graduates and employees facing unexpected layoffs that are actively searching.Structural unemployment refers to unemployment that is caused due to a mismatch between the skills that a worker offers and those that employers demand.

Hence ( C ) part is a correct answer