Which of the following conditions might cause the unemployment rate to be less than the natural rate of unemployment?
A) Demand for products starts to decrease,so firms keep their factories open for additional hours of production to make up the difference.
B) Demand for products is so high that firms keep their factories open for additional hours of production and pay their workers overtime.
C) Demand for products is so high that firms raise their prices to take advantage of extra profits.
D) The economy enters a recession,so firms start to produce more to help boost the economy.
E) The government decreases unemployment benefits.

Question

Quizplus · Accepted Answer

When demand for products is high, firms may need to hire additional workers to keep up with production, leading to a lower unemployment rate. Additionally, firms may pay existing workers overtime to work additional hours, further reducing unemployment. This can cause the actual unemployment rate to be temporarily lower than the natural rate of unemployment.

Which of the Following Conditions Might Cause the Unemployment Rate