If the unemployment rate for the U.S. economy rises from 7 to 11 percent during a year, we can conclude that
A) actual GDP exceeds potential GDP.
B) actual GDP is less than potential GDP.
C) the economy is experiencing only frictional unemployment.
D) the natural rate of unemployment for the U.S. economy has risen.

Question

Quizplus · Accepted Answer

When the unemployment rate rises significantly, it typically indicates that the actual GDP (Gross Domestic Product) is less than the potential GDP. This is because a higher unemployment rate suggests that fewer people are employed and producing goods and services, leading to a gap between what the economy is currently producing (actual GDP) and what it could produce if all resources were fully utilized (potential GDP).

If the Unemployment Rate for the U