The natural rate of unemployment
a. increases sharply during a recession but declines significantly during a business expansion.
b. is the unemployment rate accompanying the economy's maximum sustainable output.
c. is generally less than the unemployment rate associated with the economy's full-employment rate of output.
d. is present when the economy operates at approximately 94 percent of its potential GDP.
B
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If potential GDP increases, then in the figure above the potential GDP line ________, and the aggregate supply curve ________
A) does not shift; does not shift B) shifts rightward; does not shift C) does not shift; shifts rightward D) shifts rightward; shifts rightward E) shifts rightward; shifts leftward
If AVC is $10 when P = MC, a firm
A) will have positive economic profits if price is greater than $10. B) is producing too little output. C) should shut down if price is less than $10. D) is experiencing economies of scale.