If the economy is on its short-run Phillips curve at the natural unemployment rate, then in the AS-AD model, real GDP is definitely
A) less than potential GDP.
B) greater than potential GDP.
C) equal to potential GDP.
D) increasing.
E) decreasing.

Question

Quizplus · Accepted Answer

At the natural rate of unemployment, AD intersects with SRAS at the level of potential GDP, indicating that real output is equal to potential GDP.

If the Economy Is on Its Short-Run Phillips Curve at the Natural