If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent, then theMultiple Choicenatural rate of unemployment will eventually increase.cyclical unemployment rate and the frictional unemployment rate together are 5 percent.cyclical unemployment rate is 4 percent.frictional unemployment rate is 5 percent.
Question
If the unemployment rate is 9 percent and the natural rate of unemployment is 5 percent, then theMultiple Choicenatural rate of unemployment will eventually increase.cyclical unemployment rate and the frictional unemployment rate together are 5 percent.cyclical unemployment rate is 4 percent.frictional unemployment rate is 5 percent.
Solution
The correct answer is: cyclical unemployment rate is 4 percent.
Here's why:
The natural rate of unemployment is the sum of frictional and structural unemployment, which occur naturally in an economy. It does not include cyclical unemployment, which is caused by economic downturns.
In this case, the total unemployment rate is 9 percent and the natural rate of unemployment is 5 percent. The difference between these two rates is the cyclical unemployment rate. Therefore, the cyclical unemployment rate is 4 percent (9 percent - 5 percent = 4 percent).
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