The Natural Rate Hypothesis States That When the Inflation Rate

question 34

Multiple Choice

The natural rate hypothesis states that when the inflation rate

• A) increases, the unemployment rate will decrease permanently.
• B) decreases, the inflation rate will decrease permanently.
• C) changes, the unemployment rate changes temporarily and eventually returns to the natural unemployment rate.
• D) changes, the change is only temporarily and eventually the inflation rate returns to the natural inflation rate.
• E) increases, the natural unemployment rate increases.

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Definitions:

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