In periods when GDP grows very rapidly for a long period, the actual unemployment rate will be ________ than the natural rate of unemployment.
A) lower
B) higher
C) the same
D) more variable

Question

Quizplus · Accepted Answer

During periods of rapid GDP growth, the demand for labor increases as businesses expand and more workers are needed to produce goods and services. This can lead to a lower unemployment rate as more people are able to find jobs. The natural rate of unemployment, however, is the rate that occurs even when the economy is at full employment, due to factors such as job market structural changes or frictional unemployment. Therefore, the actual unemployment rate is likely to be lower than the natural rate during periods of rapid GDP growth.

In Periods When GDP Grows Very Rapidly for a Long