Refer to the above figure. Suppose the natural rate of unemployment is 5 percent. If the government tried to reduce unemployment to 4 percent and keep it there, it must
A) raise unemployment benefits.
B) accept a permanent inflation rate of 1 percent.
C) generate higher and higher inflation rates or else people will adjust their behavior and the unemployment rate will return to 5 percent.
D) use contractionary fiscal and expansionary monetary policy.
C
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In most markets, scarce goods or services are rationed among competing users using:
A. private organizations. B. government organizations. C. non-monetary prices. D. monetary prices.
A nation can accelerate its economic growth by:
A. reducing the number of immigrants allowed into the country. B. adding to its stock of capital. C. printing more money. D. imposing tariffs and quotas on imported goods.
Which of following is most likely to happen when the dollar appreciates against the euro?
A. The prices of American goods in the European countries will decline. B. The prices of European goods in the U.S. markets will decline. C. The rate of inflation in the United States will increase. D. There will be a huge inflow of "hot money" to the European nations.
If the secular trend of labor productivity is 3 percent per year, the number of years that it will take for the standard of living to double will be about:
A. 23 years. B. 20 years. C. 15 years. D. 17 years.