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If the Economy Operates with 8 Percent Unemployment,the Significance of the Curve

Question 42

Multiple Choice

If the economy operates with 8 percent unemployment,the significance of the curve is that it implies that any economic policy that drives unemployment down to 5 percent does so at the cost of


A) adding about 3 percentage points to the rate of inflation.
B) adding about 4 percentage points to the rate of inflation.
C) adding about 5 percentage points to the rate of inflation.
D) adding about 7 percentage points to the rate of inflation.
E) increasing the rate of inflation by more than 7 percentage points.

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