Which of the following about unemployment is true?
A) Frictional unemployment implies a lack of available jobs.
B) During a recession, cyclical unemployment will be low.
C) When an economy is at full employment, actual unemployment will be less than the natural rate of unemployment.
D) When actual GDP equals potential GDP, the actual unemployment rate will equal the economy's natural rate of unemployment.

Question

Quizplus · Accepted Answer

When actual GDP equals potential GDP, it means that the economy is producing at its maximum capacity and any further increase in production is not possible without causing inflation. At this point, the economy has reached its natural rate of unemployment, which is the minimum level of unemployment that exists due to structural and frictional factors. Therefore, the actual unemployment rate will be equal to the natural rate of unemployment.

Which of the Following About Unemployment Is True