When the Unemployment Rate Is Greater Than the Natural Unemployment

question 107

Multiple Choice

When the unemployment rate is greater than the natural unemployment rate,real GDP is

• A)greater than potential GDP.
• B)less than potential GDP.
• C)unrelated to potential GDP.
• D)equal to potential GDP.
• E)greater than full employment GDP.

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Definitions:

Interest Rate

The fraction of a loan amount charged as interest to the borrower, often shown as an annual percent of the outstanding loan.

New Capital

Additional funds or assets put into a business by the owners or investors intended for the expansion or improvement of the enterprise.

Profits

The financial gain realized when the revenue from an economic activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Industry

A sector of the economy characterized by the production of goods or provision of services within a certain field.