After a small hurricane in Florida, unemployment is low as there is a great deal of construction work and businesses run at full capacity. This suggests that
A)the economy is operating above the full-employment level and will eventually adjust back to long-run aggregate supply.
B)living standards are falling as employment and economic activity are too high.
C)the economy is operating below its long-run level and living standards are less than they would have been without the hurricane.
D)the hurricane is beneficial since it is increasing employment and replacing less efficient capital with newer and more efficient capital.

Question

Quizplus · Accepted Answer

The low unemployment and high levels of economic activity suggest that the economy is operating above the full-employment level. However, this is likely only temporary, as the increased construction and business activity are direct results of the hurricane and will eventually subside back to normal levels.

After a Small Hurricane in Florida, Unemployment Is Low as There