Suppose actual aggregate output is equal to the potential output; the actual unemployment rate is:

Question

Quizplus · Accepted Answer

When actual aggregate output is equal to potential output, there is no cyclical unemployment. The only unemployment that remains is structural and frictional unemployment, which make up the natural rate of unemployment. Therefore, the actual unemployment rate is equal to the natural rate of unemployment.

Suppose Actual Aggregate Output Is Equal to the Potential Output;