Final answer:
During recoveries, unemployment rates decrease as the economy grows and can sometimes exceed its potential GDP, though unemployment never falls to zero.
Step-by-step explanation:
During economic expansions or recoveries, unemployment rates typically decrease, reflecting a growing economy where businesses are hiring, and more people are finding work. As the unemployment rate falls, the economy often approaches, reaches, or even exceeds its potential GDP. However, the unemployment rate never falls to zero due to factors like frictional and structural unemployment. Historical data shows that after recessions, such as the one that started in 2009, the economy can remain below its potential GDP for some time before recovery begins. Conversely, during periods of strong economic performance, like in the late 1990s or the period from 2018 to 2020, the economy can not only reach but may also surpass its potential GDP. These fluctuations are part of the normal economic cycle, where the long-term growth trend of potential GDP ultimately determines the size of the economy.