Can someone explain how if the unemployment is above nat rate then potential GDP is greater than real? Surely if there is high employment GDP should be lower?
I think your confused because the relation holds that: economy operating above potential GDP: unemployed iis below its natural rate economy operating below potential GDP: Cyclical unemployment is present and there is a high unemployment rate
sorry ignore. I read the Q wrong. I can see that potential will be higher than what it actually is. Stupid Q!
yes thanks. I was just being retarded. I really should take a break soon!
mambovipi Wrote: ------------------------------------------------------- > Surely if there is high employment GDP > should be lower? perhaps this was a typo and you meant UNemployment, but if empoyment is high GDP will be high (simply more people working and producing)
yes it was a typo… Just ignore the whole question.