Compared to the natural rate of unemployment, the actual unemployment rate is
A) always higher.
B) always lower.
C) always the same.
D) higher in periods when GDP fails to grow at its normal rate.

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the level of unemployment that exists when the economy is at full employment, producing at its potential level of output. Therefore, the actual unemployment rate can be higher or lower than the natural rate depending on whether the economy is experiencing a recession or expansion. If the actual unemployment rate is higher than the natural rate, it indicates that the economy is not producing at its potential level of output, which could be due to a recession. Hence, the D option is correct.

Compared to the Natural Rate of Unemployment, the Actual Unemployment