If the natural unemployment rate is 5 percent and the current unemployment rate is 6 percent,then the economy is
A) producing a level of Real GDP that is greater than the level of natural Real GDP.
B) in an inflationary gap.
C) producing a level of Real GDP that is less than the level of natural Real GDP.
D) a and b
E) b and c

Question

Quizplus · Accepted Answer

When the current unemployment rate is higher than the natural unemployment rate, the economy is producing less than its potential output, indicating a recessionary gap.

If the Natural Unemployment Rate Is 5 Percent and the Current