Suppose the natural rate of unemployment is 5 percent. If the actual unemployment rate is 6 percent, then the cyclical unemployment rate

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the rate that exists when the economy is at its potential output level and there is no cyclical unemployment. In this case, the natural rate is given as 5 percent.

The actual unemployment rate is given as 6 percent.

Therefore, the cyclical unemployment rate can be calculated as the difference between the actual unemployment rate and the natural rate of unemployment:

Cyclical unemployment rate = Actual unemployment rate - Natural rate of unemployment
= 6% - 5%
= 1%

So the correct answer is A) is 1 percent.

Suppose the Natural Rate of Unemployment Is 5 Percent