Slack exists even in a vigorous U.S. economy because
A) the average capacity utilization rate is 86 percent when the 5-6 percent natural rate of unemployment is achieved.
B) the average capacity utilization rate is 81 percent when the 4 percent natural rate of unemployment is achieved.
C) the average capacity utilization rate is 81 percent and the natural rate of unemployment is roughly 5-6 percent.
D) even though full employment corresponds to a low 4 percent unemployment rate, the average capacity utilization rate is only 81 percent.

Question

Quizplus · Accepted Answer

Slack exists in an economy because even when the natural rate of unemployment is around 5-6 percent, which is considered normal or healthy, the average capacity utilization rate is only 81 percent. This means that not all resources (like labor and capital) are being used efficiently or to their full potential, indicating the presence of slack.

Slack Exists Even in a Vigorous U