Question

Consider an economy where the natural rate of unemployment is equal to 4%. If the actual unemployment rate is equal to 7%, then A. cyclical unemployment rate is 3% OB. cyclical unemployment rate is 11% OC. frictional unemployment rate is 3% OD. structural unemployment rate is 3%

Answer 1

Cyclical unemployment is 3%

Step-by-step explanation:

Total unemployment is based on the natural unemployment + the cyclical.

Since natural = 4% and the actual unemployment rate is 7% the amount of unemployment attributed to the business cycle is 7%-4%=3%