Historical data show that during the recession of 1990-1991, the natural rate of unemployment was about 5.9% while the actual unemployment rate was 7.0%. A decade later, during the 2001 recession, the natural rate of unemployment fell to 4.8% while actual unemployment was 6.0%. Using this information, which of the following statements is correct regarding these two short recessions? The actual unemployment rate was higher in 2001, while cyclical unemployment was higher from 1990-1991. Both the actual unemployment rate and cyclical unemployment were higher during the 2001 recession. Both the actual unemployment rate and cyclical unemployment were higher during the recession of 1990-1991. The actual unemployment rate was higher during the recession of 1990-1991, while cyclical unemployment was higher in 2001.

Question

Business

Dominique Kirby

20 February, 20:33

Historical data show that during the recession of 1990-1991, the natural rate of unemployment was about 5.9% while the actual unemployment rate was 7.0%. A decade later, during the 2001 recession, the natural rate of unemployment fell to 4.8% while actual unemployment was 6.0%. Using this information, which of the following statements is correct regarding these two short recessions? The actual unemployment rate was higher in 2001, while cyclical unemployment was higher from 1990-1991. Both the actual unemployment rate and cyclical unemployment were higher during the 2001 recession. Both the actual unemployment rate and cyclical unemployment were higher during the recession of 1990-1991. The actual unemployment rate was higher during the recession of 1990-1991, while cyclical unemployment was higher in 2001.

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Answers (1)

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Holden Barrett · Answer 1

The actual unemployment rate was higher during the recession of 1990-1991, while cyclical unemployment was higher in 2001.

Explanation:

Given data in the question

In the year 1990-1991

The natural rate of unemployment = 5.9%

The rate of the actual unemployment = 7.0%

In the year 2001

The natural rate of unemployment = 4.8%

The actual unemployment rate = 6.0%

As we can see that

The actual unemployment is high in the year 1990-1991 i. e 7.0% as compare to the year 2001 i. e 6.0%

While the cyclical unemployment rate is high in 2001 i. e 1.2% (6.0 - 4.8%) as compare to the year 1990-1191 i. e 1.1% (7.0% - 5.9%)