In the long run, any demand-side policy that attempts to reduce unemployment below its natural rate will

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the rate of unemployment that exists when the economy is producing at its potential level of output. If demand-side policies are implemented to reduce unemployment below this natural rate, there will be increased pressure on wages and prices, leading to inflation. Therefore, option A is the correct choice.

In the Long Run, Any Demand-Side Policy That Attempts to Reduce