Which of the following is true?
A)At the natural rate of unemployment, the economy is considered to be at full employment.
B)At full employment, the economy is producing at its potential output.
C)If unemployment is greater than its natural rate, the economy is producing at less than its potential output.
D)All of the above are true.

Question

Which of the following is true?
A)​At the natural rate of unemployment, the economy is considered to be at full employment.
B)​At full employment, the economy is producing at its potential output.
C)​If unemployment is greater than its natural rate, the economy is producing at less than its potential output.
D)​All of the above are true.

Quizplus · Accepted Answer

Option A is correct as the natural rate of unemployment is the rate consistent with the economy being at full employment (i.e., there is no cyclical unemployment).
Option B is also correct as full employment is defined as the level of employment where all available resources are being utilized, and output is at its potential level.
Option C is true as when unemployment exceeds its natural rate, it is an indication that there is some cyclical unemployment. This means that some resources (e.g. labor, capital) are being left unused, implying that the economy is producing less than its potential output. Therefore, D is the correct answer.

Which of the Following Is True