The unemployment rate can remain below the natural rate,but only _____.

A) in the long run
B) with continuous deflation
C) with a continuously increasing inflation rate
D) with a series of adverse supply shocks
E) if the money supply is constant

Question

Shweta Sharma · Accepted Answer

Final Answer : C, Explanation :  The unemployment rate can remain below the natural rate if there is a continuously increasing inflation rate. This is because inflation can temporarily lower unemployment by making labor cheaper in real terms, encouraging hiring. However, this is not sustainable in the long run without accelerating inflation due to the expectations-adjusted Phillips curve.

The unemployment rate can remain below the natural rate,but only _____.

A) in the long run
B) with continuous deflation
C) with a continuously increasing inflation rate
D) with a series of adverse supply shocks
E) if the money supply is constant

Definitions

Learning Objectives

Learning Objectives

Related questions

The unemployment rate can remain below the natural rate,but only _____.A) in the long runB) with continuous deflationC) with a continuously increasing inflation rateD) with a series of adverse supply shocksE) if the money supply is constant

Definitions

Learning Objectives

Learning Objectives

Related questions

The unemployment rate can remain below the natural rate,but only _____.

A) in the long run
B) with continuous deflation
C) with a continuously increasing inflation rate
D) with a series of adverse supply shocks
E) if the money supply is constant