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Macroeconomics

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Moderate

Potential GDP

MACRO-3XEEKF

If the economy is operating below its potential GDP, which of the following is true?

A

The actual rate of unemployment exceeds the natural rate of unemployment.

B

There is no cyclical unemployment.

C

Wages are likely to increase with the resulting excess demand for labor.

D

The natural rate of unemployment is likely to fall given the excess supply of labor.

E

There will be upward pressure on prices with the high demand for labor.