Suppose a Policy Increases the Natural Rate of Unemployment

question 165

Multiple Choice

Suppose a policy increases the natural rate of unemployment. What is the effect of such a policy change?

• A) an upward movement along the long-run Phillips curve
• B) a downward movement along the long-run Phillips curve
• C) a rightward shift of the long-run Phillips curve
• D) a leftward shift of the long-run Phillips curve

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Definitions:

Differentiated Product

A product that has distinct characteristics from its competitors, making it unique in the market.

Downward-Sloping Demand

A market condition where the quantity demanded of a good decreases as its price increases, adhering to the law of demand.

Barriers To Entry

Barriers to entry are obstacles that make it difficult for new competitors to enter an industry, protecting existing firms from competition and maintaining market power.

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for competition based on factors other than price, such as quality and branding.