When the economy is operating at a point where output is greater than the natural level of output,which of the following occurs?
A)the unemployment rate is less than the natural unemployment rate.
B)the price level is greater than the expected price level.
C)the price level will be higher next period than it is this period.
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

When the economy is operating above the natural level of output, it is in a state of expansion and there is high demand for goods and services. This leads to lower unemployment rates (A) and higher prices (B). Additionally, the higher demand and prices may lead to expectations of even higher prices in the future (C). Therefore, all of the options are true in this scenario.

When the Economy Is Operating at a Point Where Output