Suppose economists were able to measure frictional unemployment as 3%,cyclical unemployment as 2%,and structural unemployment as 4%.Then we would know that the NAIRU is ________ and the actual unemployment rate is ________.

Question

Quizplus · Accepted Answer

NAIRU stands for Non-Accelerating Inflation Rate of Unemployment, which is the unemployment rate at which inflation is stable. It is calculated as the sum of frictional and structural unemployment rates. So NAIRU in this case would be 3% + 4% = 7%. The actual unemployment rate would be the sum of all three types of unemployment, which is 3% + 2% + 4% = 9%. Therefore, the correct answer is C) 7%; 9%.

Suppose Economists Were Able to Measure Frictional Unemployment as 3%,cyclical