Suppose that in an economy the structural unemployment rate is 3.1 percent, the frictional unemployment rate is 1.7 percent, and the unemployment rate is 8.1 percent. The natural unemployment rate is _________ percent and the cyclical unemployment rate is ___________ percent.
A)1.4; 3.3
B)4.8; 12.9
C)4.8; 3.3
D)6.7; 3.3

Question

Suppose that in an economy the structural unemployment rate is 3.1 percent, the frictional unemployment rate is 1.7 percent, and the unemployment rate is 8.1 percent.  The natural unemployment rate is _________ percent and the cyclical unemployment rate is ___________ percent.
A)1.4; 3.3
B)4.8; 12.9
C)4.8; 3.3
D)6.7; 3.3

Quizplus · Accepted Answer

The natural unemployment rate is the sum of structural and frictional unemployment rates, which is 3.1% + 1.7% = 4.8%. The cyclical unemployment rate is the total unemployment rate minus the natural unemployment rate, which is 8.1% - 4.8% = 3.3%.

Suppose That in an Economy the Structural Unemployment Rate Is