If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent, then the
A) frictional unemployment rate is 5 percent.
B) cyclical unemployment rate and the frictional unemployment rate together are 5 percent.
C) cyclical unemployment rate is 4 percent.
D) natural rate of unemployment will eventually increase.

Question

Quizplus · Accepted Answer

The difference between the unemployment rate and the natural rate of unemployment is the cyclical unemployment rate, which in this case is 4 percent (9-5=4). The frictional unemployment rate is not given in this scenario. The natural rate of unemployment will not necessarily increase based on the given information.

If the Unemployment Rate Is 9 Percent and the Natural