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If equilibrium real GDP is equal to potential real GDP then A. cyclical unemployment is zero....

If equilibrium real GDP is equal to potential real GDP then A. cyclical unemployment is zero. B. the unemployment rate will be zero. C. frictional unemployment will be zero. D. structural unemployment will be zero. E. Both C and D

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Answer #1

Option a is correct. At full employment real GDP is equal to potential real GDP. At this full employment level, cyclical employment is zero. Because at natural rate of unemployment, number of job seekers is equal to number of available jobs in the market. Therefore cyclical unemployment will be zero. At natural rate of unemployment or full employment level of equilibrium, there will be structural unemployment and frictional unemployment.
All other options are wrong. Because at full employment level, only cyclical unemployment is zero, but structural unemployment and frictional unemployment will not be zero

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