When actual unemployment is less than its natural rate,the
A) economy is in a recession.
B) economy is producing within its long-run capabilities.
C) numbers must be wrong because the actual unemployment rate can never be less than the natural rate.
D) economy is in an expansion.
E) economy must be experiencing high inflation.

Question

Quizplus · Accepted Answer

When actual unemployment is less than its natural rate, it means that there are more job openings than people seeking employment. This leads to an expansionary phase in the economy as the businesses are growing and hiring more workers, which reduces the unemployment rate.

When Actual Unemployment Is Less Than Its Natural Rate,the