If New Zealand is operating at potential GDP, which of the following is true?
i) New Zealand only has frictional and structural unemployment.
ii) There is no inflation in New Zealand.
iii) New Zealand has positive net exports.

Question

If New Zealand is operating at potential GDP, which of the following is true?
i) 	New Zealand only has frictional and structural unemployment.
ii)   There is no inflation in New Zealand. 
iii)  New Zealand has positive net exports.

Quizplus · Accepted Answer

When an economy is operating at potential GDP, it typically experiences only frictional and structural unemployment, as cyclical unemployment is absent. This does not necessarily mean there is no inflation or that net exports are positive.

If New Zealand Is Operating at Potential GDP, Which of the Following