The nonaccelerating inflation rate of unemployment is the unemployment rate associated with ____ inflation and _____ unemployment.
A) high; high
B) high; low
C) low; low
D) low; high

Question

Quizplus · Accepted Answer

The nonaccelerating inflation rate of unemployment (NAIRU) is the unemployment rate associated with low inflation and low unemployment. This is sometimes referred to as the "natural rate of unemployment" as it reflects the level of unemployment that occurs when the labor market is in equilibrium and all job openings are filled. When unemployment falls below this level, inflation tends to rise, and when unemployment rises above this level, inflation tends to fall. Therefore, the answer is C, low inflation and low unemployment.

The Nonaccelerating Inflation Rate of Unemployment Is the Unemployment Rate