Suppose Policy Makers Underestimate the Natural Rate of Unemployment

question 37

Multiple Choice

Suppose policy makers underestimate the natural rate of unemployment.In situations like these,policy makers will likely implement policies that result in

• A)more unemployment than necessary.
• B)an unemployment rate that is "too high."
• C)a higher inflation rate than necessary.
• D)a steadily decreasing inflation rate.
• E) overly contractionary monetary and fiscal policy.

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Definitions:

Rotation

Movement of a structure about its axis.

Linea Alba

A fibrous structure that runs down the midline of the abdomen, providing muscle attachment.

Serratus Anterior

A muscle of the chest that assists in the upward movement of the arm and in the breathing process.

Rectus Abdominis

A long muscle running from the pubis to the rib cage, involved in flexing the lumbar spine and stabilizing the pelvis and lower back.