If actual GDP is less than potential GDP,
A) potential GDP will fall.
B) the price level will rise.
C) investment spending will fall.
D) the actual unemployment rate will be higher than the natural unemployment rate.

Question

Quizplus · Accepted Answer

If actual GDP is less than potential GDP, it means that there is a recessionary gap, indicating that the economy is operating below its full employment level. This results in higher unemployment rates, which means that the actual unemployment rate will be higher than the natural unemployment rate.

If Actual GDP Is Less Than Potential GDP