If the frictional rate of unemployment is 1.45%, the structural rate of unemployment is 2.3%, and the total unemployment rate is 6%, then we can conclude that the:
A)economy is experiencing an economic downturn.
B)labor force participation rate has fallen significantly.
C)economic growth rate has decreased by 2.25%.
D)equilibrium rate of unemployment is 2.25%.

Question

Quizplus · Accepted Answer

The total unemployment rate (6%) is higher than the sum of the frictional (1.45%) and structural (2.3%) unemployment rates, suggesting that the economy is experiencing an economic downturn, as it indicates the presence of cyclical unemployment.

If the Frictional Rate of Unemployment Is 1