Question

Dmitri recently lost his job as a waiter at a local restaurant. A recent increase in the minimum wage keeps local employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work. He continues to look for a job, but he's considering going back to school for vocational training. The following table shows data on frictional, cyclical, structural, and total unemployment for an economy.
Rate Unemployment Type(Percent)
Frictional 1.1
Cyclical 0.0
Structural 3.2
Total unemployment 4.3
This economy is not currently at its natural rate of unemployment.
A) True
B) False

Answer 1

Answer:

B. FALSE

Explanation:

This economy is currently at its natural rate of unemployment because there is no cyclical unemployment

In macroeconomics, full employment is the level of employment rates where there is no cyclical or deficient-demand unemployment.

The economy is considered to be at full employment when the actual unemployment rate is equal to the natural rate.

Hence, it is false to allege that the economy in the given scenario is not currently at its natural rate of unemployment