Use the table below to answer the following questions.
Table 26.3.3

-Refer to Table 26.3.3. When the economy is at its short-run macroeconomic equilibrium,
A)the unemployment rate is below its natural rate.
B)the unemployment rate is above its natural rate.
C)the money wage rate will rise.
D)the long-run aggregate supply curve will shift eventually shift leftward to return to full employment.
E)potential GDP will eventually increase.

Question

Use the table below to answer the following questions.
Table 26.3.3
 
-Refer to Table 26.3.3. When the economy is at its short-run macroeconomic equilibrium,
A)the unemployment rate is below its natural rate. 
B)the unemployment rate is above its natural rate. 
C)the money wage rate will rise. 
D)the long-run aggregate supply curve will shift eventually shift leftward to return to full employment. 
E)potential GDP will eventually increase.

Quizplus · Accepted Answer

When the economy is at its short-run macroeconomic equilibrium, the unemployment rate is equal to or above its natural rate. This indicates that there is still some slack in the labor market, and firms are not willing to hire enough workers at the current wage rate. In the short-run, the economy may operate below its potential output. As a result, the long-run aggregate supply curve will eventually shift rightward as potential GDP increases, and the economy moves toward full employment.

Use the Table Below to Answer the Following Questions