Suppose that in an economy the structural unemployment rate is 2.1 percent,the frictional unemployment rate is 2.3 percent,and the unemployment rate is 12.1 percent.The natural unemployment rate is _________ percent and the cyclical unemployment rate is ___________ percent.
A) 7.7; 4.4
B) 0.2; 9.9
C) 4.4; 7.7
D) 10; 3.1

Question

Quizplus · Accepted Answer

The natural unemployment rate is the sum of the structural and frictional unemployment rates, which is 2.1% + 2.3% = 4.4%. The cyclical unemployment rate is the difference between the actual unemployment rate and the natural unemployment rate, which is 12.1% - 4.4% = 7.7%. Therefore, the answer is C.

Suppose That in an Economy the Structural Unemployment Rate Is