If Policy Makers Estimate the Natural Rate of Unemployment Incorrectly

question 159

Multiple Choice

If policy makers estimate the natural rate of unemployment incorrectly,

• A)their policies will cause deflation in the long run
• B)their policies will cause even more unemployment in the long run
• C)the economy will stay below its potential GDP level in the long run
• D)the economy will tend toward that level of unemployment the policy makers believe is correct
• E)policies that appear to be successful in the short run will lead to further economic problems