Figure 23-2
-Refer to Figure 23-2. Suppose that the level of GDP associated with point N is potential GDP. If the U.S. economy is currently at point K, then
A) firms are operating above capacity.
B) the economy is at full employment.
C) the economy is in recession.
D) the level of unemployment is equal to the natural rate.

Question

Figure 23-2 
-Refer to Figure 23-2. Suppose that the level of GDP associated with point N is potential GDP. If the U.S. economy is currently at point K, then
A) firms are operating above capacity. 
B) the economy is at full employment. 
C) the economy is in recession. 
D) the level of unemployment is equal to the natural rate.

Quizplus · Accepted Answer

If the economy is at point K and point N represents potential GDP, then the economy is producing below its potential, indicating a recession.

Figure 23-2 -Refer to Figure 23-2. Suppose That the Level of GDP