According to the natural rate hypothesis,the natural rate of unemployment is
A)largely independent of the level of aggregate supply stimulus provided by fiscal or monetary policy
B)largely independent of the level of aggregate demand stimulus provided by fiscal or monetary policy
C)dependent on the level of aggregate supply stimulus provided by fiscal or monetary policy
D)dependent on the level of aggregate demand stimulus provided by fiscal or monetary policy
E)dependent on the size of the federal budget deficit or surplus

Question

Quizplus · Accepted Answer

The natural rate hypothesis suggests that the natural rate of unemployment is largely independent of the level of aggregate demand stimulus provided by fiscal or monetary policy. In other words, changes in demand-side policies such as fiscal or monetary policy may have short-term effects on employment and unemployment rates, but in the long run, the economy will tend to return to its natural rate of unemployment.

According to the Natural Rate Hypothesis,the Natural Rate of Unemployment