According to the Equation for the Phillips Curve, If Nominal

question 50

Multiple Choice

According to the equation for the Phillips curve, if nominal wages and labor productivity both increase by 3%, then the inflation rate _____ and unemployment _____.

• A) increases by 3%; falls
• B) increases by 3%; rises
• C) is zero; is at its natural rate
• D) increases by 3%; is at its natural rate

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