The following table shows some labor statistics for four years.

-Refer to the table above.Based on these 4 years of data,what is the best estimate for the natural rate of unemployment?

Question

The following table shows some labor statistics for four years.
 
-Refer to the table above.Based on these 4 years of data,what is the best estimate for the natural rate of unemployment?

Quizplus · Accepted Answer

The natural rate of unemployment is best estimated by finding the average unemployment rate when the economy is not in a recession. Assuming the table shows a mix of recession and non-recession years, the years not in recession would give the closest estimate to the natural rate. Without the specific data, a general approach is to exclude the highest and lowest rates if they are outliers due to recession or boom years, then average the remaining rates. Given the choices, 7.7 percent seems to be a reasonable estimate based on this approach.

The Following Table Shows Some Labor Statistics for Four Years