Author Question: When the economy is operating at a level of real GDP that is greater than its potential level, we ... (Read 97 times)

bcretired · **on:** Jun 30, 2018

When the economy is operating at a level of real GDP that is greater than its potential level, we know that

A) the structural rate of unemployment is negative.
B) the frictional unemployment is zero.
C) the actual unemployment rate is greater than the natural rate of unemployment.
D) the cyclical rate of unemployment is negative.

Question 2

Suppose the inflation rate target is 0 and the long run federal funds target is also 0. If the federal funds rate set using the Taylor rule is 2 and output is above trend output by 1, the inflation rate is ________.

A) 3 B) 2.5 C) 1 D) -0.5