Question

If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent, then the:___________. A. frictional unemployment rate is 5 percent. B. cyclical unemployment rate and the frictional unemployment rate together are 5 percent. C. cyclical unemployment rate is 4 percent. D. natural rate of unemployment will eventually increase.

Answer 1

Answer:

C. cyclical unemployment rate is 4 percent.

Explanation:

The cyclical unemployment is associated with business cycles of recessions and expansions. The actual unemployment rate is given by the natural rate of unemployment added to the cyclical unemployment rate. In this case, the cyclical unemployment rate is:

$C = 9\%-5\% = 4\%$

The answer is C. cyclical unemployment rate is 4 percent.