Which Is More Stable

question 38

Multiple Choice

Which is more stable?

• A)A
• B)B
• C)neither

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Definitions:

Natural Rate

Often referred to as the natural rate of unemployment, it is the level of unemployment consistent with a stable rate of inflation.

Unemployment

Unemployment is the state of being without a job despite actively looking for work, reflecting the portion of the labor force unable to find gainful employment.

Friedman-Phelps Analysis

The Friedman-Phelps analysis introduces the concept of the natural rate of unemployment, arguing that inflation and unemployment rates are not linked in the long term due to adaptive expectations.

Inflation

The pace at which overall prices for goods and services increase, causing the value of money to diminish.