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The business cycle diagram below shows the cyclical movement of actual real GDP relative to potential real GDP over time for the nation of Galactica.The economy of Galactica is expanding and the actual unemployment rate exceeds the natural rate of unemployment for which year in the above diagram?A) 1992B) 1996C) 2002D) 2007E) 2011

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Final answer:

Based on the information about periods when actual GDP was above potential GDP, and without the actual diagram, 1996 is inferred to be the most likely year the economy of Galactica was expanding with the actual unemployment rate exceeding the natural rate.

Step-by-step explanation:

To determine in which year the economy of Galactica is expanding and the actual unemployment rate exceeds the natural rate of unemployment, we must refer to the business cycle and the concept of actual GDP relative to potential GDP. Based on the information provided, the years after the recession of 2008-2009 saw actual GDP remaining below potential GDP until 2016. In the late 1990s, however, the actual GDP was at or above potential GDP, which typically corresponds to a period of economic expansion.

Given this understanding and without having the diagram in question, we can infer that 1996 is the year most likely to have seen actual GDP above potential GDP, which signifies an expanding economy. During these times, if the actual unemployment rate exceeds the natural rate, it is usually due to a rapidly growing economy overheating, which leads to inflationary pressures rather than to higher than normal cyclical unemployment. Without the needed diagram or additional context to indicate the year more accurately, the best educated guess would be 1996 due to the information relating the late 1990s with actual GDP being above its potential.

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