If the existing unemployment rate is 3.1 percent and the natural unemployment rate is 4.5 percent, the cyclical unemployment rate is ________ percent.
A. 7.6
B. 3.8
C. -1.4
D. 1.4
Answer: C. -1.4
Cyclical unemployment rate = -1.4
Explanation
Cyclical unemployment rate = existing unemployment rate - natural unemployment rate
= 3.1 - 4.5
= -1.4
Total unemployment includes frictional unemployment, structural unemployment and cyclical unemployment.
Natural unemployment includes frictional unemployment and structural unemployment.
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