Suppose that the natural unemployment rate is 4.5 percent and the actual unemployment rate is 3.5 percent. Then cyclical unemployment is

Question

Quizplus · Accepted Answer

Cyclical unemployment is calculated as the difference between the actual unemployment rate and the natural unemployment rate. In this case, 3.5% - 4.5% = -1%. This indicates that the actual unemployment rate is lower than the natural rate, suggesting an economy potentially operating above its long-run potential.

Suppose That the Natural Unemployment Rate Is 4