An economy in a recessionary gap finds that unemployment rate is greater than the natural unemployment rate and that a shortage exists in the labor market. True or false

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Social Studies

Drew Wright

9 May, 17:36

An economy in a recessionary gap finds that unemployment rate is greater than the natural unemployment rate and that a shortage exists in the labor market. True or false

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Milo Deleon · Answer 1

False

Explanation:

While it is true that an economy in a recessionary gap has an unemployment rate higher than the natural rate of unemployment, which in other words means that the employment levels are lower than the full employment rate, it is false that the same economy has a shortage in the labor market.

In fact, it is the opposite, the unemployment rate is above the full employment rate because there is a surplus of labor that cannot find employment in the economy.