When the output gap is positive, the unemployment rate is:
A) positive.
B) above the natural rate.
C) below the natural rate.
D) negative.

Name: When the output gap is positive, the unemployment rate is: A) positive. B) above the natural rate. C) below the natural rate. D) negative.
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Question

Quizplus · Accepted Answer

When the output gap is positive, it means the economy is producing above its potential, which typically results in lower unemployment rates, hence the unemployment rate is below the natural rate.

When the Output Gap Is Positive, the Unemployment Rate Is