Which statement is likely to be TRUE if actual output is equal to potential output?
A) The actual unemployment rate is equal to the natural rate of unemployment.
B) The actual unemployment rate is above the natural rate of unemployment.
C) There will be zero unemployment.
D) The natural rate of unemployment will be above the actual unemployment rate.

Question

Quizplus · Accepted Answer

When actual output is equal to potential output, the economy is operating at full employment. This means that the actual unemployment rate is equal to the natural rate of unemployment, which represents the portion of unemployment that exists even when the economy is operating at full employment. Therefore, option A is the correct choice.

Which Statement Is Likely to Be TRUE If Actual Output