Final answer:
The c. natural rate of unemployment is the consistent level of unemployment expected due to various economic forces, outside of booms or recessions, and includes frictional and structural unemployment.
Step-by-step explanation:
The student's question revolves around the concept of the natural rate of unemployment and what occurs in the long-term scenario if the economy operates at this natural rate. The natural rate of unemployment refers to the level of unemployment that persists in an economy due to various economic, social, and political factors, even when the economy is not experiencing significant expansion or recession. This rate includes the effects of both frictional unemployment, which happens as people move between jobs or are temporarily unemployed due to shifts in the economy, and structural unemployment, which occurs when certain skills become less in-demand permanently.
From analyzing historical data and trends, economists can determine a typical natural unemployment rate that an economy tends toward over time, which serves as a baseline. For instance, during different periods of economic shifts like recessions and booms, the economy may deviate from this natural rate but tends to return to it as it stabilizes. Factors that can affect the natural rate of unemployment include changes in technology, demographic shifts, productivity rates, and governmental policies concerning hiring and firing.