"To achieve the nonperfectionist's goal of high enough output to give us no more than 3 percent unemployment,the price index might have to rise by as much as 4 or 5 percent per year." This statement made by two Nobel Prize-winning economists is
A) false;if we were willing to accept annual inflation of 5 percent,an unemployment rate of less than 3 percent could be achieved.
B) false;while a reduction in unemployment to 3 percent is attainable,it would require annual inflation of 8 percent to 10 percent to be sustained in the long run.
C) false;the statement fails to recognize that inflation does not stimulate output and employment when it is widely anticipated.
D) essentially true.
Correct Answer:
Verified
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