If the economy is on its short-run Phillips curve at the natural unemployment rate, then in the AS-AD model, real GDP is definitely
A)decreasing.
B)greater than potential GDP.
C)less than potential GDP.
D)increasing.
E)equal to potential GDP.

Question

Quizplus · Accepted Answer

When the economy is at the natural unemployment rate, it is operating at full employment, meaning real GDP is equal to potential GDP in the AS-AD model.

If the Economy Is on Its Short-Run Phillips Curve at the Natural