Suppose the unemployment rate is 10% and an economist breaks the unemployment rate into the following components: frictional (3%) and structural (3%). Based on these estimates, the cyclical inflation rate is

Question

Quizplus · Accepted Answer

Cyclical unemployment is the difference between the total unemployment rate and the sum of frictional and structural unemployment rates. Here, it's 10% - (3% + 3%) = 4%.

Suppose the Unemployment Rate Is 10% and an Economist Breaks