If the economy is operating at a 7 percent unemployment rate we are operating
A)inside the production possibilities curve.
B)on the production possibilities curve.
C)outside the production possibilities curve.

Question

Quizplus · Accepted Answer

The unemployment rate is a measure of the unused labor in an economy. Operating at a 7 percent unemployment rate means that there is still some unused labor, but not to the extent that would cause the economy to be operating beyond its maximum production capacity. Therefore, the economy is operating inside the production possibilities curve.

If the Economy Is Operating at a 7 Percent Unemployment