Assume we have the following economic data Unomployment rate

Assume we have the following economic data Unomployment rate : 8% Inflation rate = 2% Annual labor force growth rate = 1% ·Annual increase in worker productivity = 2% Us ng thc abovo daina n roil Gl ) growili oquals 2%. or that yoar wo can expod: The supply side growth rate will increase. The unemployment rate will increase. The gap between actual and potential output will remain constant. The gap between actual and potential output will decrease.

Solution

Consider the given problem here given the data the supply side growth rate will increase because of “growth rate of labor force” and the “increase in productivity”. Here “unemployment will remain same” and we can’t make any conclusion about “gap between “actual and potential output”.

=> the correct option is “A”.