Question at position 12 at the peakon the potential linein contractionin expansionat the trough

Question

BlackTom AI · Accepted Answer

When actual output equals potential output, cyclical unemployment is zero and the actual unemployment rate equals the natural rate (also called the NAIRU).

Relevant concepts:
- Potential output is the economy’s sustainable level of production; when actual = potential, there is no output gap.
- Total (actual) unemployment = natural unemployment + cyclical unemployment.
- Cyclical unemployment arises from the business cycle: it is positive when output is below potential (recession/trough) and negative (or unemployment below natural) when output is above potential (boom/peak).

Step-by-step reasoning:
1. Express the relationship: u_actual = u_natural + u_cyclical.
2. If actual output = potential output, the output gap = 0. That implies cyclical unemployment = 0.
3. Substitute cyclical = 0 into the relationship: u_actual = u_natural + 0 = u_natural.
4. Therefore the actual rate of unemployment equals the natural rate exactly at the point where the actual output curve crosses the potential output line.

Why the correct choice is correct:
- The “on the potential line” position means actual output equals potential output, so by definition cyclical unemployment is zero and actual unemployment equals the natural rate.

Why the other options are incorrect:
- At the peak: actual output is above potential (positive output gap), so cyclical unemployment is negative and actual unemployment is below the natural rate.
- In contraction: actual output is falling below potential (negative gap), so cyclical unemployment is positive and actual unemployment is above the natural rate.
- In expansion: typically actual output is rising and may be above potential during a boom; while unemployment falls, it does not necessarily equal the natural rate unless it coincides with the potential line.
- At the trough: actual output is well below potential, cyclical unemployment is strongly positive, and actual unemployment exceeds the natural rate.

Conclusion: The actual unemployment rate equals the natural rate when the economy is on the potential line (correct answer: on the potential line).

Question at position 12 at the peakon the potential linein contractionin expansionat the trough单项选择题

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