1. Suppose that because of a war, U.S. workers and factories must work 60 hours per week. In this situation,

potential GDP has increased.

potential GDP has decreased.

actual GDP is above potential GDP.

actual output is below potential GDP.

2. According to the Congressional Budget Office estimates, output was 2.9% below potential output in the 4th quarter of 2014. The unemployment rate was 5.7%. What was the implied natural rate of unemployment? (Round to the nearest 10th; do not include a % sign in your answer.)

3. A rise in inventory investment is consistent with which of the following?

Firms expect sales to rise in the coming months.

Firms expect sales to fall in the coming months.

Current sales were higher than expected.

Current sales were lower than expected.

Both A and D.

Both B and C.