Suppose that the unemployment rate equals 4.5 percent and that the natural unemployment rate is
5)5 percent. We can conclude that
A) the output gap equals zero.
B) we have mismeasured the natural unemployment rate.
C) the output gap is positive.
D) the output gap is negative.

Question

Quizplus · Accepted Answer

When the actual unemployment rate is below the natural unemployment rate, it indicates that the economy is producing above its potential output, leading to a positive output gap.

Suppose That the Unemployment Rate Equals 4