Suppose the NAIRU for Canada is 6 percent, the actual unemployment rate is 7 percent, and productivity is constant. We can conclude that
A) there is an inflationary gap.
B) the excess supply of labour will put downward pressure on wages.
C) the AD curve will automatically shift up.
D) the NAIRU will readjust to 7 percent.
E) the excess demand for labour will put upward pressure on wages.
Correct Answer:
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