If the professional opinions of economists regarding the natural rate of unemployment vary between 4.5 and 6 percent, then when the actual rate of unemployment equals 5 percent:

Question

Quizplus · Accepted Answer

Since the range of natural rate of unemployment given by economists is between 4.5 and 6 percent, it is unclear whether the actual rate of unemployment at 5 percent represents an expansionary gap, recessionary gap, at potential or the natural rate of unemployment itself. It depends on the accuracy of measurement and whether the economy is operating at potential or not. Therefore, option D could be the correct answer.

If the Professional Opinions of Economists Regarding the Natural Rate