The natural rate hypothesis states that
A)changes in the inflation rate temporarily change the natural unemployment rate.
B)it is natural for the unemployment rate to be less than the natural unemployment rate.
C)only natural economic policies can bring a permanent reduction in the unemployment rate.
D)changes in the inflation rate temporarily change the unemployment rate.
E)it is natural for the unemployment rate to exceed the inflation rate.

Question

Quizplus · Accepted Answer

The natural rate hypothesis suggests that changes in the inflation rate can temporarily affect the unemployment rate, but in the long run, the unemployment rate will return to its natural level.

The Natural Rate Hypothesis States That