According to Friedman and Phelps, no matter what a central bank does to the money supply, which of the following will happen in the long run?
A)The economy will have a zero inflation rate.
B)The unemployment rate will tend toward the natural rate of unemployment.
C)The inflation rate will tend to the natural rate of inflation.
D)The economy will have a zero unemployment rate.

Question

Quizplus · Accepted Answer

The natural rate of unemployment is the rate of unemployment that exists in the long run when the economy is at full employment. This means that there is no cyclical unemployment and that the only unemployment that exists is structural unemployment.

According to Friedman and Phelps, No Matter What a Central