Figure 7-7 -Refer to Figure 7-7. At output level Y_K, A) potential output is less than actual output. B) there is a surplus of real GDP. C) the unemployment rate exceeds the natural rate of unemployment. D) over time aggregate demand will rise to restore long-run equilibrium.

Question

Quizplus · Accepted Answer

At output level Y_K, the economy is producing less than its potential output, indicating that there is a recessionary gap. This means that the unemployment rate is higher than the natural rate of unemployment.

Figure 7-7 -Refer to Figure 7-7. at Output Level YK

Figure 7-7 -Refer to Figure 7-7. at Output Level Y_K