If actual Real GDP is greater than the full employment Real GDP, then the (actua

Question

If actual Real GDP is greater than the full employment Real GDP, then the (actual) unemployment rate is

a. less than the natural unemployment rate and an inflationary gap exists.
b. equal to the natural unemployment rate and no gap exists.
c. greater than the natural unemployment rate and an inflationary gap exists.
d. greater than the natural unemployment rate and a recessionary gap exists.
e. less than the natural unemployment rate and a recessionary gap exists.

In the 1990's the U.S. and Nato bombed Serbia destroying many factories and much of the country's infrastructure. As a result:

a. Serbias long-run aggregate supply curve has shifted outward (to the right).
b. Serbias long-run aggregate supply curve has shifted inward (to the left).
c. there has been movement up along Serbias long-run aggregate supply curve, but the curve has not shifted.
d. there has been movement down along Serbias long-run aggregate supply curve, but the curve has not shifted.

Explanation / Answer

If actual Real GDP is greater than the full employment Real GDP, then the (actual) unemployment rate is

a. less than the natural unemployment rate and an inflationary gap exists.
b. equal to the natural unemployment rate and no gap exists.
c. greater than the natural unemployment rate and an inflationary gap exists.
d. greater than the natural unemployment rate and a recessionary gap exists.
e. less than the natural unemployment rate and a recessionary gap exists.

In the 1990's the U.S. and Nato bombed Serbia destroying many factories and much of the country's infrastructure. As a result:

a. Serbias long-run aggregate supply curve has shifted outward (to the right).
b. Serbias long-run aggregate supply curve has shifted inward (to the left).
c. there has been movement up along Serbias long-run aggregate supply curve, but the curve has not shifted.
d. there has been movement down along Serbias long-run aggregate supply curve, but the curve has not shifted.

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