An unemployment rate greater than the natural rate means:
A) the economy is in equilibrium at potential output.
B) the economy is experiencing an inflationary gap.
C) the economy is not in short run equilibrium.
D) the economy is experiencing a recessionary gap.

Question

Quizplus · Accepted Answer

When the unemployment rate is greater than the natural rate, it typically indicates that the economy is experiencing a recessionary gap, where actual output is less than potential output.

An Unemployment Rate Greater Than the Natural Rate Means