In Which of the Following Cases Would the Actual Unemployment

question 65

Multiple Choice

In which of the following cases would the actual unemployment rate be less than the NAIRU; that is, U < U*?
1) frictional unemployment = 2%; structural unemployment = 4%; cyclical unemployment = 4%
2) frictional unemployment = 3%; structural unemployment = 3%; cyclical unemployment = -2%
3) frictional unemployment = 2%; structural unemployment = 4%; cyclical unemployment = 0%

• A) 1 only
• B) 2 only
• C) 3 only
• D) 2 and 3 only
• E) 1 and 2 only

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Definitions:

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