Each of the following is one of the factors determining the economy's equilibrium inflation and unemployment rates except
A) the level of unemployment when the interest rate is at what the central bank thinks of as its long-run average rate.
B) the expected rate of inflation.
C) the slope of the monetary policy reaction function.
D) the natural level of output.

Question

Quizplus · Accepted Answer

The natural level of output is not directly a factor in determining the equilibrium inflation and unemployment rates; it is more related to potential output and long-term growth rather than short-term equilibrium conditions.

Each of the Following Is One of the Factors Determining