If Policy Makers Estimate the Natural Rate of Unemployment Incorrectly,_____

question 133

Multiple Choice

If policy makers estimate the natural rate of unemployment incorrectly,_____.

• A)their policies will cause deflation in the long run
• B)their policies will cause even more unemployment in the long run
• C)the economy will stay below its potential GDP in the long run
• D)the economy will tend toward the level of unemployment the policy makers believe is correct
• E)policies that appear to be successful in the short run will lead to further economic problems

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Definitions:

Deregulation

The reduction or elimination of government power in a particular industry, usually with the aim of creating more competition within the industry.

Monopoly

A market structure characterized by a single seller who has exclusive control over the supply and pricing of a unique product or service.

Negative Externalities

Unintended and unfavorable side effects of an economic activity that affect third parties not involved in the activity.

Majority Voting

A voting system where decisions are made based on the preference of more than half of the votes cast, commonly used in elections and organizational decision-making.