Question

Suppose the natural rate of unemployment is 5 percent, there is 2.5 percent frictional unemployment, and the actual rate of unemployment is 7 percent. Then:
A) structural unemployment is 2.5 percent and cyclical unemployment is 6.5 percent
B) structural unemployment is 2.5 percent and cyclical unemployment is 2 percent
C) structural unemployment is 2 percent and cyclical unemployment is 2 percent
D) structural unemployment is 6.5 percent and cyclical unemployment is 2 percent