Question

If the natural rate of unemployment equals 5 percent and the actual rate of unemployment equals 6 percent, then cyclical unemployment equals:

A. 1.2 percent.
B. 1 percent.
C. -1 percent.
D. 11 percent.

Answer 1

The cyclical unemployment can be calculated by subtracting the natural rate of unemployment from the actual rate of unemployment. In this case, the cyclical unemployment is 1 percent.The correct answer is option B. 1 percent.

Step-by-step explanation:

The cyclical unemployment can be calculated by subtracting the natural rate of unemployment from the actual rate of unemployment. In this case, the natural rate of unemployment is 5 percent and the actual rate of unemployment is 6 percent. Therefore, the cyclical unemployment can be calculated as:

Cyclical unemployment = Actual rate of unemployment - Natural rate of unemployment

Cyclical unemployment = 6 percent - 5 percent = 1 percent

So, the correct answer is B. 1 percent.