Figure 12-2
-Refer to Figure 12-2.Suppose that the level of GDP associated with point N is potential GDP.If the U.S.economy is currently at point K,
A)firms are operating above capacity.
B)the economy is at full employment.
C)the economy is in recession.
D)the level of unemployment is equal to the natural rate.

Question

Figure 12-2 
-Refer to Figure 12-2.Suppose that the level of GDP associated with point N is potential GDP.If the U.S.economy is currently at point K,
A)firms are operating above capacity. 
B)the economy is at full employment. 
C)the economy is in recession. 
D)the level of unemployment is equal to the natural rate.

Quizplus · Accepted Answer

Point K is below potential GDP, which means that the economy is producing less than its full potential, also known as a recession.

Figure 12-2 -Refer to Figure 12-2.Suppose That the Level of GDP Associated