-Refer to Exhibit 9-3.If the economy is in short-run equilibrium at point A,
A) the (actual)unemployment rate is less than the natural unemployment rate.
B) the (actual)unemployment rate is equal to the natural unemployment rate.
C) the (actual)unemployment rate is greater than the natural unemployment rate.
D) the relationship between the (actual)unemployment rate and the natural unemployment rate cannot be determined from the available information.

Question

-Refer to Exhibit 9-3.If the economy is in short-run equilibrium at point A,
A) the (actual)unemployment rate is less than the natural unemployment rate. 
B) the (actual)unemployment rate is equal to the natural unemployment rate. 
C) the (actual)unemployment rate is greater than the natural unemployment rate. 
D) the relationship between the (actual)unemployment rate and the natural unemployment rate cannot be determined from the available information.

Quizplus · Accepted Answer

At point A, the economy is producing at a level below its potential output, which implies that the actual unemployment rate is higher than the natural rate of unemployment. This is because when output is below potential, not all resources (including labor) are being fully utilized, leading to higher unemployment.