If the economy is in a strong expansion and moved beyond its long-run equilibrium real national output,then the
A)natural rate of unemployment has fallen.
B)cyclical rate of unemployment is positive.
C)cyclical rate of unemployment is zero.
D)cyclical rate of unemployment is negative.

Question

Quizplus · Accepted Answer

When the economy is in a strong expansion and has moved beyond its long-run equilibrium real national output, it implies that the demand for labor is high to meet the increased production needs. This situation typically leads to a decrease in unemployment rates below the natural rate of unemployment, which is reflected in a negative cyclical rate of unemployment. The cyclical component of unemployment varies inversely with the business cycle, so during strong expansions, this component is negative, indicating that the actual unemployment rate is below the natural rate.

If the Economy Is in a Strong Expansion and Moved