According to the "Acceleration Hypothesis", the Inflation Rate Will Accelerate

question 42

Multiple Choice

According to the "acceleration hypothesis", the inflation rate will accelerate when actual output is held

• A)above potential output.
• B)at the NAIRU.
• C)at the level where unemployment is at the natural rate.
• D)at potential output.
• E)below potential output.

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Definitions:

Phillips Curve

A macroeconomic theory that suggests unemployment and inflation have a stable and inverse relationship, indicating trade-offs short-term policy-making.

Disinflation

A reduction in the rate of inflation, indicating a slowdown in the rate at which prices are rising.

Money Supply Growth

The rate at which the total amount of money available in an economy changes over a specific period of time.

Unemployment

Unemployment refers to the situation when individuals who are capable of working and are actively seeking employment are unable to find a job.