When an economy is producing at its potential level of output:
A) cyclical unemployment is not occurring.
B) structural unemployment is not occurring.
C) frictional unemployment is not occurring.
D) there is no unemployment.

Question

Quizplus · Accepted Answer

When an economy is producing at its potential level of output, cyclical unemployment, which is associated with economic downturns, is not occurring. Structural and frictional unemployment can still exist even when the economy is at its potential output.

When an Economy Is Producing at Its Potential Level of Output