If the natural rate of unemployment equals 5% and the actual rate of unemployment equals 6%,then cyclical unemployment equals

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Quizplus · Accepted Answer

The natural rate of unemployment refers to the rate of unemployment that exists when the economy is in a steady state, with stable inflation and output growth. The actual rate of unemployment refers to the current rate of unemployment in the economy. The difference between the two is the cyclical unemployment rate, which reflects the short-term fluctuations in economic activity.

In this case, the natural rate of unemployment is 5% and the actual rate of unemployment is 6%. Therefore, the cyclical unemployment rate is 1%, which represents the portion of unemployment that is due to the current state of the economy rather than structural or frictional factors.

If the Natural Rate of Unemployment Equals 5% and the Actual