What fraction of the labor force is cyclically unemployed when structural unemployment is 2 percent,frictional unemployment is 2.5 percent,seasonal unemployment is 1 percent,and the overall unemployment rate is 8 percent?

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Quizplus · Accepted Answer

Cyclical unemployment is the portion of unemployment that is due to fluctuations in the business cycle. When the economy is in a recession, cyclical unemployment increases. When the economy is in an expansion, cyclical unemployment decreases.Structural unemployment is the portion of unemployment that is due to changes in the structure of the economy. For example, when new technologies are introduced, some workers may lose their jobs because their skills are no longer needed.Frictional unemployment is the portion of unemployment that is due to workers moving between jobs. For example, a worker may quit one job to take another job that offers better pay or benefits.Seasonal unemployment is the portion of unemployment that is due to seasonal changes in the economy. For example, construction workers may be unemployed during the winter months when construction activity is slow.The overall unemployment rate is the sum of the cyclical, structural, frictional, and seasonal unemployment rates.In this case, the overall unemployment rate is 8 percent, the structural unemployment rate is 2 percent, the frictional unemployment rate is 2.5 percent, and the seasonal unemployment rate is 1 percent. Therefore, the cyclical unemployment rate is 8 percent - 2 percent - 2.5 percent - 1 percent = 2.5 percent.

What Fraction of the Labor Force Is Cyclically Unemployed When