Use the following to answer questions:
-(Figure: Actual and Natural Rates of Unemployment) Refer to Figure: Actual and Natural Rates of Unemployment. In 2000, the output gap was:
A) positive.
B) negative.
C) zero.
D) impossible to determine without more information.

Question

Use the following to answer questions: 
-(Figure: Actual and Natural Rates of Unemployment) Refer to Figure: Actual and Natural Rates of Unemployment. In 2000, the output gap was:
A) positive. 
B) negative. 
C) zero. 
D) impossible to determine without more information.

Quizplus · Accepted Answer

The output gap is the difference between actual GDP and potential GDP. In 2000, the actual rate of unemployment was above the natural rate, indicating that the economy was operating below potential. Therefore, the output gap was positive.

Use the Following to Answer Questions