Suppose that in an economy the frictional unemployment rate is 3.1 percent,the natural unemployment rate is 4.5 percent,and the cyclical unemployment rate is -1 percent.The structural unemployment rate is _________ percent and the actual unemployment rate (in this economy)is ___________ percent.
A) 1.4; 5.5
B) 1.4; 3.5
C) 7.6; 6.6
D) 3.5; 1.4

Question

Quizplus · Accepted Answer

To find the structural unemployment rate, we can use the formula:

structural unemployment rate = natural unemployment rate - frictional unemployment rate

Therefore, the structural unemployment rate in this economy is:

structural unemployment rate = 4.5% - 3.1% = 1.4%

To find the actual unemployment rate, we can use the formula:

actual unemployment rate = natural unemployment rate + cyclical unemployment rate

Therefore, the actual unemployment rate in this economy is:

actual unemployment rate = 4.5% - 1% = 3.5%

Therefore, the best choice is B, which has both the correct structural unemployment rate and actual unemployment rate.

Suppose That in an Economy the Frictional Unemployment Rate Is