The rate of unemployment that occurs when the economy is producing its potential GDP _____.

A) is called the natural rate of unemployment
B) is zero
C) is thought to be approximately 10%
D) can be kept at zero through fiscal policy
E) is equal to the rate of stagflation in most years

Natural Rate

often refers to the natural rate of unemployment, where the economy is at equilibrium, taking into account the frictional and structural factors.

Potential GDP

The maximum possible level of output an economy can achieve when it is most efficiently utilizing its resources.

Unemployment

A situation where individuals who are able and willing to work cannot find jobs, measured as a percentage of the labor force.