Suppose the natural rate of unemployment is 4 percent. If the actual unemployment is 5 percent, then the cyclical unemployment rate is

Question

Quizplus · Accepted Answer

Cyclical unemployment is the difference between the actual unemployment rate and the natural unemployment rate, so the cyclical unemployment rate in this case would be 5% - 4% = 1%. The other answer choices are not possible because unemployment rates cannot be negative.

Suppose the Natural Rate of Unemployment Is 4 Percent