When an economy is experiencing an inflationary gap, actual unemployment is __________ than the natural rate, leading to inflationary pressures.

When an economy is in an inflationary gap, it means that the demand for goods and services is higher than what the economy can produce at full capacity. This situation causes businesses to hire more workers, which leads to actual unemployment being lower than the natural rate of unemployment. The natural rate is the level of unemployment that occurs when the economy is healthy and balanced, usually including people who are temporarily between jobs. Because more people are working than usual, there is more money in circulation, which can lead to rising prices, or inflation. For example, if a factory hires extra workers to meet high demand for its products, the increased spending by those workers can push prices up, causing inflation.