If Policy Makers Think the Natural Rate of Unemployment Is

question 47

Multiple Choice

If policy makers think the natural rate of unemployment is lower than it really is,then their policies designed to move the economy to the estimated natural rate,if continued over the long run,will:

• A)cause continuing inflation.
• B)shift the long-run aggregate supply curve to the right.
• C)shift the supply curve of labor to the right.
• D)lead to a lower price level.
• E)keep the economy below its potential GDP level.

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Definitions:

Consumer Goods

Products that are sold directly to consumers for their personal or household use, typically including items like electronics, appliances, and clothing.

Capital Goods

Long-term assets such as machinery, buildings, and equipment purchased by businesses to produce goods and services.

Production Possibility Frontier

A curve depicting all maximum output possibilities for two or more goods given a set of inputs, assuming full and efficient utilization of resources.

Opportunity Cost

The exclusion of favorable outcomes from different choices upon selecting one option.