Suppose Policy Makers Underestimate the Natural Rate of Unemployment

question 37

Multiple Choice

Suppose policy makers underestimate the natural rate of unemployment.In situations like these,policy makers will likely implement policies that result in

• A)more unemployment than necessary.
• B)an unemployment rate that is "too high."
• C)a higher inflation rate than necessary.
• D)a steadily decreasing inflation rate.
• E) overly contractionary monetary and fiscal policy.