CFA Practice Question
Regarding actual unemployment rate and natural unemployment rate:
II. The actual rate generally falls below the natural rate during a recession.
III. The actual rate generally rises above the natural rate during an economic boom.
IV. The actual rate generally falls below the natural rate during an economic boom.
V. The actual rate generally remains the same as the natural rate during a recession.
VI. The actual rate generally remains the same as the natural rate during an economic boom.
I. The actual rate generally rises above the natural rate during a recession.
II. The actual rate generally falls below the natural rate during a recession.
III. The actual rate generally rises above the natural rate during an economic boom.
IV. The actual rate generally falls below the natural rate during an economic boom.
V. The actual rate generally remains the same as the natural rate during a recession.
VI. The actual rate generally remains the same as the natural rate during an economic boom.
Which statement(s) is (are) correct?
A. I and IV.
B. II and III.
C. I and VI.
Explanation: The actual rate fluctuates around the natural rate, in response to cyclical economic condition. During the past four decades the actual rate of unemployment generally rises above the natural rate during a recession and falls below the natural rate when the economy is in the midst of an economic boom.
User Contributed Comments 7
| User | Comment |
|---|---|
| danlan | It can fall below the natural rate! |
| dealsoutlook | yup..obviously just temporarily |
| MBCs | ugh -- UNemployment not employment |
| rhardin | How many questions am I going to miss before I learn to READ THE QUESTION?!?! Ugh. |
| cwest020 | natural unemployment is about 5%, in a boom we can have 2% unemployment. |
| ColonelCFA | Not reading the questions... gets me every time... |
| birdperson | i did the same thing... lol |