The figure below shows the short-run aggregate supply curve of an economy.In this figure,if P1 is the price level prevailing in the economy,it implies that:

A)there is an expansionary gap.
B)the price level will decrease.
C)the actual unemployment rate is equal to the natural unemployment rate.
D)the actual unemployment rate is below the natural unemployment rate.
E)the actual rate of output is more than the potential output.

Question

The figure below shows the short-run aggregate supply curve of an economy.In this figure,if P1 is the price level prevailing in the economy,it implies that:

A)there is an expansionary gap. 
B)the price level will decrease. 
C)the actual unemployment rate is equal to the natural unemployment rate. 
D)the actual unemployment rate is below the natural unemployment rate. 
E)the actual rate of output is more than the potential output.

Quizplus · Accepted Answer

At P1, the SRAS curve intersects with the long-run aggregate supply (LRAS) curve at the natural level of output which corresponds to the natural rate of unemployment. Therefore, the actual unemployment rate is equal to the natural rate of unemployment.

The Figure Below Shows the Short-Run Aggregate Supply Curve of an Economy.In