Suppose the NAIRU for Canada is 6.5 percent, the actual unemployment rate is 5 percent and productivity is constant. We can conclude that
A) the excess demand for labour will put upward pressure on wages.
B) the NAIRU will re- adjust to 5 percent.
C) the AD curve will automatically shift up.
D) there is a recessionary gap.
E) the excess supply of labour will put downward pressure on wages.
Correct Answer:
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