If actual GDP equals potential GDP,then

Question

Quizplus · Accepted Answer

When actual GDP equals potential GDP, it means the economy is producing at its full capacity and there is no cyclical unemployment. The natural rate of unemployment comprises of frictional and structural unemployment, and when actual GDP equals potential GDP, there is no cyclical unemployment, leading to the actual unemployment rate being equal to the natural rate of unemployment. Therefore, choice B is the correct answer.

If Actual GDP Equals Potential GDP,then