Note: decimal .05 is written as 5% converted into percentage terms, .7 as 70% and so forth

Labor force 100000

100000 100000

______

100000

100000

______ 100000

100000

Employed

Unemployed

Unemployment .10 .20 .05 .15 ___ ___

Naturalunempl .07 .10 .04 .08 .20 ___

Cyclicalunempl. .03 .10 .01 .07 .05 ___

GDP gap -.06 -.20 ___ -.14 -.10 -.12 -.02

90000 ______ 95000 10000 20000 5000

______ ______ 

75000 ______

88000 12000

96000 _____

95000 87000 5000 13000

__

note: cyclical unemployment rate multiplied by -2 = GDP gap, positive GDP gap implies negative cyclical unemployment rate