When real GDP is above potential GDP,
A) frictional unemployment is probably above normal levels.
B) frictional unemployment is probably below normal levels.
C) structural unemployment is probably above normal levels.
D) cyclical unemployment is probably above normal levels.
E) seasonal unemployment is probably above normal levels.

Question

Quizplus · Accepted Answer

When real GDP is above potential GDP, the economy is operating at a high level of output, which typically leads to lower unemployment rates across the board. Frictional unemployment, which is the short-term unemployment that occurs when people are between jobs or entering the workforce, is likely below normal levels because jobs are more readily available in such an economic environment.

When Real GDP Is Above Potential GDP