According to the Congressional Budget Office, which regularly estimates the natu

Question

According to the Congressional Budget Office, which regularly estimates the natural rate of unemployment in the United States, the natural rate fell steadily from 6.3 percent of the labor force in 1979 to about 4.8 percent in 2007. Some economists have argued that since the unemployment rate remained close to 4 percent for several years, the natural rate must be even lower. Why was the U.S. natural rate of unemployment so much lower in the late 2000s than in the late 1970s?

The natural rate of unemployment may have fallen because of:
rev: 3_21_2013_QC_28582

a fall in cyclical unemployment, or a fall in structural unemployment, or both. a fall in cyclical unemployment, or a fall in seasonal unemployment, or both. a fall in cyclical unemployment, or a fall in frictional unemployment, or both. a fall in frictional unemployment, or a fall in structural unemployment, or both.

Explanation / Answer

a fall in cyclical unemployment, or a fall in frictional unemployment, or both.

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