When Unemployment Is Above Its Natural Rate, the Inflation Rate

question 179

Multiple Choice

When unemployment is above its natural rate, the inflation rate will eventually

• A)increase.
• B)decrease.
• C)move to its natural rate.
• D)become equal to the natural rate of unemployment.
• E)accelerate toward hyperinflation.

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Definitions:

Foreign Competition

The presence of competitors from other countries in a domestic market.

Tariffs

Taxes that a government places on imported goods, often to protect domestic industries or to raise revenue.

Quotas

Regulatory measures imposing limits on the amount or value of goods that can be traded, typically used in international trade.

Export Subsidies

Government payments made to domestic firms to encourage exports.