Suppose Venezuela experiences economic growth in 2013, yet its unemployment rate is 15 percent, which is above the South American average. This indicates that Venezuela's 2013 output is
A) below potential output.
B) above potential output.
C) above actual output.
D) below actual output.

Question

Quizplus · Accepted Answer

The unemployment rate being above the South American average suggests that there is still unused labor in the economy, indicating that actual output is below potential output. Therefore, even if there is economic growth, it is not at its full potential.

Suppose Venezuela Experiences Economic Growth in 2013, Yet Its Unemployment