Question

Suppose that in an economy the structural unemployment rate is 2.2 percent, the natural unemployment rate is 5.3 percent, and the cyclical unemployment rate is 2 percent. The frictional unemployment rate is _________ percent and the actual unemployment rate (in this economy) is ___________ percent.

Answer 1

Answer:

The frictional unemployment rate is 3.1 percent and the actual unemployment rate (in this economy) is 7.3 percent.

Explanation:

natural unemployment rate = frictional unemployment + structural unemployment

frictional unemployment = natural unemployment - structural unemployment = 5.3% - 2.2% = 3.1%

actual unemployment rate = natural unemployment + cyclical unemployment rate = 5.3% + 2% = 7.3%

Frictional unemployment is voluntary and happens when someone quits his/her job in order to look for a better job. Structural unemployment happens when the skills of the workers do not match the requirements of the hiring companies. Cyclical unemployment takes place when the economy is in recession.