When the actual unemployment rate is equal to the natural unemployment rate, then the
A)inflation rate must be zero.
B)long-run aggregate supply curve is upward sloping.
C)short-run aggregate supply curve is vertical.
D)economy is operating at potential GDP.
E)the money wage rate will rise.

Question

Quizplus · Accepted Answer

When the actual unemployment rate is equal to the natural unemployment rate, it means that the economy is operating at its potential GDP, which is the level of output produced when all available resources are being utilized efficiently, and there is no cyclical unemployment. In this situation, the economy has reached its long-run equilibrium and is no longer experiencing any inflationary or recessionary pressures. Therefore, the correct answer is option D.

When the Actual Unemployment Rate Is Equal to the Natural