According to the AS-AD Model, When Real GDP Exceeds Potential

question 166

Multiple Choice

According to the AS-AD model, when real GDP exceeds potential GDP, the unemployment rate is definitely

• A) less than the natural unemployment rate.
• B) equal to the natural unemployment rate.
• C) greater than the natural unemployment rate.
• D) falling.
• E) rising.

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Definitions:

Talent and Ability

The natural aptitude or acquired skills possessed by individuals that enable them to perform certain tasks or excel in certain fields.

Median Earnings

The middle value of income earned, such that half of earners make more and half make less, often used to measure central tendency of income distribution.

Compensating Differentials

Wage differentials that arise from the need to compensate workers for non-monetary aspects of a job, such as difficult working conditions or undesirable locations.

Midnight Shift

A work schedule that typically runs through the night hours, often starting at or around midnight and lasting until morning.