If the natural rate of unemployment equals 4% and the actual rate of unemployment equals 6%,then cyclical unemployment equals

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the sum of frictional and structural unemployment, which is a long-term phenomenon and exists even in a healthy economy. Therefore, the difference between the actual rate of unemployment and the natural rate of unemployment is the cyclical unemployment, which is a short-term phenomenon caused by business cycles.

Cyclical unemployment = Actual rate of unemployment - Natural rate of unemployment
= 6% - 4%
= 2%

If the Natural Rate of Unemployment Equals 4% and the Actual