When the economy is operating at an output rate less than full-employment capacity

The options for this question are the following:

a. current rate of output will tend to persist into the future.

b. strong demand for resources will cause resource prices to rise.

c. actual unemployment rate will be less than the natural rate of unemployment.

d. actual level of unemployment will exceed the natural rate of unemployment.

The correct answer is D. actual level of unemployment will exceed the natural rate of unemployment.

Explanation:

The natural unemployment rate is one that represents a level of unemployment that cannot be reduced and is part of what is considered normal in an economy. This level usually ranges between 2% and 5% and is part of the frictional unemployment of the population.

The natural unemployment rate exists, in part, because some workers quit their job, ceasing to receive income for a time, considering different reasons. These may be, for example, the aspiration for a better professional opportunity or the distance to the workplace.

That is, even when there is full employment, certain people may decide to lose their jobs. This is what is known as frictional unemployment, since individuals need time to find the right job.

It is normal for workers to move between companies because the labor market is flexible. For example, let's imagine that an engineer works for a company X, but another company Y offers better economic conditions. However, there may be a time interval, suppose a month, between the worker's departure from one firm and his entry to another. This, because perhaps a series of interviews should happen.

On the other hand, there are sectors with more mobility than others. For example, the financial or IT and communications sector has great mobility in developed economies.

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