Answer to Question #47821 in Macroeconomics for Brandon

Question

The structural unemployment rate is 1.3 percent, the frictional unemployment rate is 2.1 percent, and the current unemployment rate is 4.9 percent. The economy is in

Answer 1

If Unemployment rate > natural rate of unemployment, then a recessionary gap exist.
Natural unemployment = Frictional unemployment + Structural unemployment = 1.3+2.1 = 3.4
4.9 > 3.4
So, if the structural unemployment rate is 1.3 percent, the frictional unemployment rate is 2.1 percent, and the current unemployment rate is
4.9 percent. The economy is in a recessionary gap producing less than Natural Real GDP