When the unemployment rate is equal to its natural rate-that is,no cyclical unemployment exists-the output level produced in the economy is
A) always increasing.
B) at full-employment output.
C) below full-employment output.
D) above full-employment output.
E) always decreasing.

Question

Quizplus · Accepted Answer

When the unemployment rate is equal to the natural rate, it means that there is no cyclical unemployment, which is the only type of unemployment that results in production being below the full-employment output level. Therefore, the output level produced in the economy is at full-employment output.

When the Unemployment Rate Is Equal to Its Natural Rate-That