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Suppose the Measured Unemployment Rate Is 7

Question 60

Multiple Choice

Suppose the measured unemployment rate is 7.5% and the true natural rate of unemployment is 5.1%. If the chair of the Fed believes the natural rate of unemployment to be 6.7%, then the chair will


A) stimulate the economy when it should be slowed.
B) slow the economy when it should be stimulated.
C) stimulate the economy, exactly as called for.
D) slow the economy, exactly as called for.

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