Question

In 2020Q1 the US unemployment rate was 3.8% and the (estimated) natural unemployment rate was 4.4%. This means the (estimated) cyclical unemployment rate was g

Answer 1

Answer:

The (estimated) cyclical unemployment rate was 0.60%.

Explanation:

The cyclical unemployment rate can be calculated as the difference between the natural unemployment rate and the unemployment rate. This can be stated as follows:

Cyclical unemployment rate = Natural unemployment rate - Unemployment rate ........................... (1)

Where, for the US, we have:

Natural unemployment rate = 4.4%

Unemployment rate = 3.8%

Substituting the values into equation (1), we have:

Cyclical unemployment rate = 4.4% - 3.8% = 0.60%

Therefore, the (estimated) cyclical unemployment rate was 0.60%.