If the natural rate of unemployment is 5% and the actual rate of unemployment is 4%:
A) disinflation is likely.
B) it will not affect prices.
C) inflation will increase.
D) the short-run Phillips curve will shift down.

Question

Quizplus · Accepted Answer

When the actual unemployment rate is below the natural rate, it indicates an economy operating above its potential, leading to increased demand for goods and services, which can cause inflation to increase.

If the Natural Rate of Unemployment Is 5% and the Actual