Potential GDP Is the Level of Output Produced When the Unemployment

question 23

Multiple Choice

Potential GDP is the level of output produced when the unemployment rate is

• A)less than the natural unemployment rate.
• B)equal to the natural unemployment rate.
• C)greater than the natural unemployment rate.
• D)made up of only cyclical unemployment.
• E)zero.

---

Definitions:

Unemployment

The situation where individuals who are capable of working and are actively seeking work remain jobless.

Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, eroding purchasing power over time.

Ceteris Paribus

A Latin term used in economics to describe the analysis of a condition under the assumption that all other variables remain unchanged.

Scarcity

The basic economic issue arises from unlimited human desires facing limited resources on the planet.