When the economy is operating at a point where output is less than the natural level of output,which of the following occurs?
A)the unemployment rate is greater than the natural unemployment rate.
B)the price level is less than the expected price level.
C)the price level will be lower next period than it is this period.
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

When output is less than the natural level, unemployment is higher than the natural rate, the price level is lower than expected, and prices tend to decrease further.

When the Economy Is Operating at a Point Where Output