Suppose that the inflation rate has been 2 percent per year for several years, and the unemployment rate has been stable at 4 percent. Unanticipated changes in government policy cause the inflation rate to increase to 4 percent. In the short run, we would expect the unemployment rate to

A. decrease.
B. increase to 7 percent.
C. increase, but the exact amount cannot be known for sure.
D. remain constant.


Answer: A

Economics

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According to this Application, in the year 2075, the portion of GDP devoted to spending on Social Security, Medicare and Medicaid is expected to be

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Why do economists predict that investment increases when the real rate of interest falls?

What will be an ideal response?

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Indicate whether the statement is true or false

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