If the natural rate of unemployment is 5.2 percent and the actual rate of unemployment is 5.7 percent,then by definition there is
A)cyclical unemployment amounting to 0.5 percent of the labor force.
B)frictional unemployment amounting to 0.5 percent of the labor force.
C)structural unemployment amounting to 0.5 percent of the labor force.
D)search unemployment amounting to 0.5 percent of the labor force.

Question

Quizplus · Accepted Answer

The actual rate of unemployment is higher than the natural rate of unemployment, which means that there is an excess supply of labor in the economy. Therefore, the economy is experiencing cyclical unemployment, which refers to the unemployment caused by the business cycle or economic fluctuations. The difference between the actual rate of unemployment and the natural rate of unemployment represents the cyclical unemployment rate, which in this case is 0.5 percent of the labor force.

If the Natural Rate of Unemployment Is 5