Unemployment will be at its target rate when actual inflation is:
A)3 percent and expected inflation is 3 percent.
B)3 percent and expected inflation is 0 percent.
C)0 percent and expected inflation is 3 percent.
D)6 percent and expected inflation is 3 percent.

Question

Quizplus · Accepted Answer

Unemployment will be at its target rate when actual inflation matches expected inflation, as this indicates that the economy is in equilibrium without unexpected inflationary pressures that could distort employment levels.

Unemployment Will Be at Its Target Rate When Actual Inflation