If the economy is producing ________,unemployment is at its natural rate.

Question

Quizplus · Accepted Answer

When the economy is producing at potential GDP, it means that it is producing at its maximum sustainable level, which includes the natural rate of unemployment. The natural rate of unemployment is the rate of unemployment that exists when the economy is producing at its potential level and is not in a recession. Therefore, if the economy is producing at potential GDP, unemployment is at its natural rate.

If the Economy Is Producing ________,Unemployment Is at Its Natural