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

Question

Quizplus · Accepted Answer

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

The Natural Rate Hypothesis Asserts That