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

---

Definitions:

Homo Erectus

An extinct species of early human that lived from approximately 2 million to roughly 100,000 years ago, known for being one of the first hominins to use fire and sophisticated tools.

Laurasia

An ancient supercontinent that is believed to have been in the northern hemisphere and subsequently split into North America, Europe, and Asia.

Lumpers

Scholars or researchers who prefer to classify information into large categories, simplifying complexities.

Splitters

Refers to scientists, especially taxonomists, who prefer to classify organisms into many fine categories based on small differences.