When real GDP is ________ potential GDP, the unemployment rate is ________ the natural unemployment rate.
A) greater than; less than
B) less than; equal to
C) equal to; greater than
D) greater than; greater than

Question

Quizplus · Accepted Answer

When real GDP is greater than potential GDP, the economy is operating above its long-term sustainable level, leading to lower unemployment rates than the natural rate of unemployment. This is because high demand for goods and services often leads to increased hiring.

When Real GDP Is ________ Potential GDP, the Unemployment Rate