The natural rate hypothesis asserts that in the ________, the money wage rate is fixed and the ________ in the inflation rate brings a(n) ________ in the unemployment rate.
A) short run; increase; decrease
B) short run; decrease; increase
C) short run; increase; increase
D) short run; decrease; decrease
E) long run; increase; decrease

Question

Quizplus · Accepted Answer

The natural rate hypothesis suggests that in the short run, due to sticky wages, an increase in the inflation rate can temporarily decrease unemployment. This is because real wages may fall, leading employers to hire more workers.

The Natural Rate Hypothesis Asserts That in the ________, the Money