Which of the following is true about potential gdp: select one:
a. for a nation to be at its potential gdp, the unemployment rate has to be zero.
b. current gdp will be below potential gdp. a nations actual gdp can never be greater than its potential
c. when current gdp is greater than potential gdp, then current unemployment will be below the natural unemployment rate
d. if the current unemployment rate is below the natural unemployment rate, then

The correct answer is option C.

Explanation:

At the potential level of GDP, the unemployment rate is equal to the natural rate of unemployment. It is considered the full employment level, though the unemployment rate is not zero. There is no cyclical unemployment at this point, but structural and frictional unemployment exists.  

When the current GDP is greater than the potential GDP, it means that the economy is facing inflationary pressures. At this level, the unemployment rate will be lower than the natural rate of unemployment.  

In such situations, the government needs to adopt contractionary policies to correct the fluctuations in the economy and bring the economy back to the potential or full employment level.

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