Some economists argue that increases in labour-force participation rates by young people and females in the 1970s and 1980s caused

Question

Quizplus · Accepted Answer

NAIRU stands for non-accelerating inflation rate of unemployment. It is the level of unemployment below which inflation rises and above which inflation falls. When labour force participation rates of young people and females increased in the 1970s and 1980s, it led to an increase in the potential labour supply. As a result, the NAIRU increased because the economy could sustain a higher level of unemployment without triggering inflation. Therefore, the correct answer is D - an increase in NAIRU.

Some Economists Argue That Increases in Labour-Force Participation Rates by Young