In late 2006, the unemployment rate increased from 4.4 percent to 4.5 percent. It was reported that new jobs were created in several sectors including accounting, engineering services, computer design and education. These increases offset job losses in the construction and automobile industries. At the
Same time, the natural unemployment rate was estimated to be about 5.5 percent
Based on the story, the labor market reflects
A) a negative output gap.
B) cyclical unemployment.
C) efficiency wages.
D) a positive output gap.

Question

Quizplus · Accepted Answer

The unemployment rate is below the natural rate, indicating a positive output gap where the economy is producing above its potential.

In Late 2006, the Unemployment Rate Increased from 4