Question

Suppose that in an economy the structural unemployment rate is 1.1 percent, the frictional unemployment rate is 3.3 percent, and the unemployment rate is 3.1 percent. The natural unemployment rate is ____ percent and the cyclical unemployment rate is ____ percent.

a.0.2;9.9
b.44;-1.3
c.2.2;3.1
d.75;44

Answer 1

The natural unemployment rate is the sum of structural and frictional unemployment, which in this case is 4.4 percent, and the cyclical unemployment rate is the actual unemployment rate minus the natural rate, resulting in -1.3 percent.

Step-by-step explanation:

The concepts of structural unemployment, frictional unemployment, and cyclical unemployment, which are essential in understanding the overall unemployment rate in an economy. According to the provided figures, the natural rate of unemployment is the sum of structural (1.1 percent) and frictional (3.3 percent) unemployment rates, which equals 4.4 percent.

The cyclical unemployment rate can be determined by subtracting the natural rate from the actual unemployment rate (3.1 percent - 4.4 percent). Since this results in a negative number (-1.3 percent), it indicates that the actual unemployment rate is below the natural rate, and there is no cyclical unemployment. Thus, the correct answer is b. 4.4; -1.3