Gce Model Questions Vol1 2017 Economics Question 12

Practice objective / multiple choice question 12 from the 2017 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2017 Economics Objective / Multiple Choice Medium Difficulty
Question 12 GCE_MODEL_QUESTIONS_VOL1 • 2017 • ECONOMICS • objective

In Year A the actual unemployment rate in Econland is 9 %. The frictional unemployment rate is 2 % and the structural unemployment rate is 3 %. In Year B the actual unemployment rate falls to 6 % while the frictional and structural rates remain unchanged. Calculate (i) the natural rate of unemployment, (ii) the cyclical unemployment in each year, and (iii) the percentage change in cyclical unemployment from Year A to Year B.

Answer Options

A. Natural rate = 5 %; cyclical unemployment Year A = 4 %; Year B = 2 %; cyclical unemployment fell by 50 %
Correct Answer B. Natural rate = 5 %; cyclical unemployment Year A = 4 %; Year B = 1 %; cyclical unemployment fell by 75 %
C. Natural rate = 5 %; cyclical unemployment Year A = 5 %; Year B = 1 %; cyclical unemployment fell by 80 %
D. Natural rate = 5 %; cyclical unemployment Year A = 3 %; Year B = 1 %; cyclical unemployment fell by 66 %
Correct Answer
B
Correct Option:
Natural rate = 5 %; cyclical unemployment Year A = 4 %; Year B = 1 %; cyclical unemployment fell by 75 %

About This Question

This is Gce Model Questions Vol1 2017 Economics Question 12. It is one of the objective questions from the 2017 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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