Figure 23-2
-Refer to Figure 23-2.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 23-2 
-Refer to Figure 23-2.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 to the left of point N, indicating that the real GDP is below potential GDP. This suggests that the economy is in a recessionary gap, where firms are producing below their capacity and unemployment is likely above the natural rate.

Figure 23-2 -Refer to Figure 23-2.Suppose That the Level of GDP Associated