Question

Suppose that in an economy the structural unemployment rate is 3.1 percent, the frictional unemployment rate is 1.7 percent, and the unemployment rate is 8.1 percent. The natural unemployment rate is _________ percent and the cyclical unemployment rate is ___________ percent.

Answer 1

Natural unemployment= 4.8%

Cyclical unemployment= 3.3%

Step-by-step explanation:

Natural unemployment refers to the percentage of people that become unemployed because of natural movement of labor and not because of economic instability.

Natural unemployment= Frictional unemployment + Structural unemployment

Natural unemployment= 3.1 + 1.7

Natural unemployment= 4.8%

Cyclical unemployment is when people become unemployed because of downtime in business cycle. It occurs when there is a big drop in demand and companies are forced to lay workers off.

Cyclical unemployment= Unemployment rate - Natural unemployment

Cyclical unemployment= 8.1 - 4.8

Cyclical unemployment= 3.3%