Refer to Figure 9.2 for the following questions.
Figure 9.2

-Suppose that in Figure 9.2, the level of GDP associated with point N is potential GDP. If the Australian economy is currently at point K:
A)firms are operating above capacity.
B)the economy is at full employment.
C)the economy is in equilibrium below full employment.
D)the level of unemployment is equal to the natural rate.

Question

Refer to Figure 9.2 for the following questions.
Figure 9.2
 
-Suppose that in Figure 9.2, the level of GDP associated with point N is potential GDP. If the Australian economy is currently at point K:
A)firms are operating above capacity. 
B)the economy is at full employment. 
C)the economy is in equilibrium below full employment. 
D)the level of unemployment is equal to the natural rate.

Quizplus · Accepted Answer

Point K is below the potential GDP level, indicating that the economy is not utilizing all of its resources and is below full employment. Therefore, the economy is in equilibrium below full employment.

Refer to Figure 9.2 for the Following Questions