Which of the following does NOT describe the natural rate of output?
A) It occurs when the economy is at full employment.
B) It is the output that exists when all wages and prices have adjusted.
C) It is the output level that is associated with the long-run aggregate supply curve.
D) It always occurs when no government policy impacts the economy.

Question

Quizplus · Accepted Answer

The natural rate of output is defined by conditions A, B, and C, which relate to full employment, price and wage adjustments, and the long-run aggregate supply curve. However, it does not require the absence of government policy impacts on the economy, making D incorrect. Government policies can affect the economy in various ways but do not determine whether the economy is at its natural rate of output.

Which of the Following Does NOT Describe the Natural Rate