The natural rate hypothesis states that when the inflation rate
A) increases, the unemployment rate will decrease permanently.
B) changes, the unemployment rate changes temporarily and eventually returns to the natural unemployment rate.
C) decreases, the inflation rate will decrease permanently.
D) changes, the change is only temporary, and eventually the inflation rate returns to the natural inflation rate.
E) increases, the natural unemployment rate increases.
B
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Crowding out occurs when investment declines because
a. a budget deficit makes interest rates rise. b. a budget deficit makes interest rates fall. c. a budget surplus makes interest rates rise. d. a budget surplus makes interest rates fall.
The table above provides information about the marginal private benefit for education
The marginal private cost, which also equals the marginal social cost, of educating a student is $16,000 per year and does not change as more students are educated. There is an external benefit from education that is equal to $12,000 per student year and does not change as more students are educated. What is the efficient amount of education? A) 40,000 student-years B) 60,000 student-years C) 80,000 student-years D) 100,000 student-years
In the IS model, assuming that the real interest rate does not change, an increase in ________ leads to an increase in equilibrium saving by households
A) autonomous consumption B) taxes C) financial frictions D) all of the above E) none of the above
Assume 300 billion pounds of Ostrich meat is produced per year when the price is 50 cents per pound, and 500 billion pounds when the price is 60 cents per pound. The supply of Ostrich meat, other factors held constant, is:
A. price elastic. B. price inelastic. C. income elastic. D. income inelastic.