Question

Economists believe that some

level of unemployment is
natural and necessary for a
growing economy. This level of
unemployment is known as
which of the following?
A. natural rate of unemployment
B. average unemployment
C. necessary unemployment

Answer 1

Answer: The correct answer is :

A. natural rate of unemployment

Explanation: No real economy can have zero unemployment. For the proper and healthy functioning of a growing economy, some amount of unemployment is necessary. This unemployment is known as natural unemployment or natural rate of unemployment.

The natural rate of unemployment emerges from volitional economic forces. It is considered to be a combination of frictional and structural unemployment. Wherein, frictional means the kind of unemployment that occurs from the people who are in-between jobs or are looking for them, and structural unemployment means unemployment due to fundamental shifts in the structure of an industry or such sector which causes reorganization of people like technological change.

Such changes occur frequently in a growing economy and hence economists believe that this level of unemployment is natural and necessary for growth.

Answer 2

A. natural rate of unemployment

Step-by-step explanation:

This is also known as the equilibrium rate of unemployment or the long-run rate of unemployment. It is the level of unemployment that is consistent with a stable price level in an economy. It is the unemployment rate that is expected to persist in the long run, even when the economy is operating at full capacity. It is believed to be caused by structural factors in the labor market, such as the time it takes for workers to search for and find new jobs and the time it takes for firms to fill vacancies. It is generally thought to be around 4% in the United States.