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The natural rate of unemployment

Multiple Choice
can vary over time and defines the location of the long-run aggregate supply curve.
is constant over time and defines the location of the long-run aggregate supply curve.
varies over time in response to changes in aggregate demand.
is inversely related to the price level.

1 answer

The correct answer is:

can vary over time and defines the location of the long-run aggregate supply curve.

The natural rate of unemployment can change due to factors such as changes in labor market policies, demographic shifts, or technological advances, and it is indeed tied to the long-run aggregate supply curve.