During a recession,output is
A)above potential and unemployment is below the natural rate
B)above potential and unemployment is above the natural rate
C)below potential and unemployment is below the natural rate
D)below potential and unemployment is above the natural rate
E)below potential and the price level is below the natural level

Question

Quizplus · Accepted Answer

During a recession, output falls below its potential level and unemployment rises above its natural rate. This means that the economy is producing less than it is capable of, and there are more people willing and able to work than there are job openings. Therefore, choice D (below potential and unemployment is above the natural rate) is the correct answer.

During a Recession,output Is