If the natural rate of unemployment declines ________.
A)labor is more heavily utilized
B)potential output increases
C)the long run aggregate supply curve shifts to the right
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

When the natural rate of unemployment declines, it means more people are employed, resulting in higher labor utilization. This can increase the potential output of an economy. As a result, the long run aggregate supply curve shifts to the right. Therefore, all of the above choices - labor being more heavily utilized, potential output increasing, and the long run aggregate supply curve shifting to the right - are correct.

If the Natural Rate of Unemployment Declines ________