When the Economy Is at Its Potential Output Level,which of the Following

question 222

Multiple Choice

When the economy is at its potential output level,which of the following is not true?

• A)Actual unemployment is equal to the natural rate of unemployment.
• B)The unemployment rate is about 2 percent.
• C)The economy is producing its maximum sustainable output.
• D)The actual price level equals the expected price level.

---

Definitions:

Free Trade

International trade left to its natural course without tariffs, quotas, or other restrictions.

NAFTA

The North American Free Trade Agreement, a treaty between Canada, Mexico, and the United States that removed tariff barriers between the nations.

GATT

The General Agreement on Tariffs and Trade, an international treaty that aimed to reduce tariffs and other trade barriers; precursor to the World Trade Organization.

Economists

Experts in the study of economics, focusing on the distribution, consumption, and production of goods and services.