According to the natural rate hypothesis:
a. a short-term as well as long-term trade-off exists between unemployment and inflation
b. economic fluctuations are the result of external negative and positive productivity shocks to the economy
c. workers and consumers incorporate the likely consequences of government policy changes into their expectations by quickly adjusting wages and prices.
d. the economy will self-correct to the natural rate of unemployment.
d
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Exhibit 6-13 Cost curves
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In Exhibit 6-13, TFC is shown by the graph labeled:
A. I. B. II. C. III. D. IV.
The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
Which of the following is/are NOT a characteristic of a perfectly competitive market?
A. a small number of firms in a market B. selling a standardized product C. no barriers to entry D. an individual firm having no control over price
The imposition of a new excise tax will
A) increase equilibrium price and increase equilibrium quantity. B) increase equilibrium price and decrease equilibrium quantity. C) decrease equilibrium price and increase equilibrium quantity. D) decrease equilibrium price and decrease equilibrium quantity.