Use the figure below to answer the following question(s). Figure 9-2
Which of the following is true for the economy depicted in Figure 9-2?
A) Output equals potential real GDP.
B) The actual rate of unemployment equals the natural rate of unemployment.
C) The output is sustainable in the long run.
D) All of the above statements are true.

Question

Use the figure below to answer the following question(s). Figure 9-2
 Which of the following is true for the economy depicted in Figure 9-2?
A) Output equals potential real GDP. 
B) The actual rate of unemployment equals the natural rate of unemployment. 
C) The output is sustainable in the long run. 
D) All of the above statements are true.

Quizplus · Accepted Answer

A) Output equals potential real GDP since the level of output is at the intersection of AD and LRAS.
B) The actual rate of unemployment equals the natural rate of unemployment since the level of output is at potential real GDP, which is the economy's long-run equilibrium output level, and is consistent with the natural rate of unemployment.
C) The output is sustainable in the long run since it is at potential real GDP, which is the economy's full-capacity output level. Therefore, the economy is not operating below or above its long-run potential, implying that the output growth rate can be sustained without causing inflation or recession.

Use the Figure Below to Answer the Following Question(s)