Question

Cyclical unemployment is equal to zero when:

A. there is no expansionary gap.

B. actual GDP and potential GDP are equal.

C. there is no recessionary gap.

D. frictional unemployment equals structural unemployment.

Answer 1

Cyclical unemployment is equal to zero when actual GDP and potential GDP are equal.

Step-by-step explanation:

Cyclical unemployment is equal to zero when actual GDP and potential GDP are equal. When the economy is producing at potential GDP, there is no expansionary or recessionary gap, and cyclical unemployment is eliminated. Actual GDP represents the current level of economic output, while potential GDP represents the maximum level of output that an economy can sustain in the long run.