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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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  1. 21 February, 00:22
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    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%)
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