An unemployment problem can be identified in the aggregate expenditures model when:
A) equilibrium is to the left of the natural rate of output.
B) output is at a point above the aggregate expenditures curve.
C) output is at a point below the aggregate expenditures curve.
D) equilibrium is to the right of the natural rate of output.

Question

Quizplus · Accepted Answer

When equilibrium is to the left of the natural rate of output, it indicates that the economy is not producing at its full capacity, leading to unemployment problems.

An Unemployment Problem Can Be Identified in the Aggregate Expenditures