Question

Explain how it's possible for actual GDP to temporarily exceed full-employment GDP.


"full-employment GDP" is a defined concept. Full employment does not mean 100% employment -- an economy has a "natural rate of unemployment" and reflects the fact that in an economy, there will always be workers between jobs. Further, a person not working is not necessarily unemployed. To be unemployed, one must want to work an be paid the prevailing wage rate.

Take a shot at an answer.


Thank you--that makes sense.