When there is an inflationary gap, (actual) Real GDP is Natural Real GDP, and the (actual) unemployment rate is the natural unemployment rate. Group of answer choices

higher than: lower than

Explanation:

When there is an inflationary gap, (actual) Real GDP is higher than Natural Real GDP, and the (actual) unemployment rate is lower than the natural unemployment rate.

In an Inflationary gap, the economy is overheated and performing better than the long term equilibrium which means that resources are being overused. The Real GDP will therefore be more than the Natural Long-term GDP.

The Real GDP will be higher because there will be much more goods and services produced. This will need more people to produce them so unemployment will be lower than it would have been at the Natural GDP.