The natural rate hypothesis asserts that
A) when prices change, the inflation rate changes temporarily and then returns to its natural rate.
B) price changes occur at a natural rate, near a 6 per cent average inflation rate.
C) changes in the unemployment rate are natural and long-lasting.
D) changes in the natural unemployment rate are only temporary.
E) changes in the unemployment rate from changes in the inflation rate are temporary.

Question

Quizplus · Accepted Answer

The natural rate hypothesis suggests that any deviation in unemployment due to changes in inflation is temporary, and the economy will return to its natural rate of unemployment.

The Natural Rate Hypothesis Asserts That