Suppose We Observe Several Years of Falling Inflation Rates for an Economy

question 9

Multiple Choice

Suppose we observe several years of falling inflation rates for an economy. Which of the following would best explain this phenomenon?

• A) Unemployment is at the natural rate.
• B) The unemployment rate is constant at the natural rate.
• C) The unemployment rate is below the natural rate.
• D) The unemployment rate is above the natural rate.
• E) Aggregate output is increasing.

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