When unemployment is below its natural rate,the inflation rate will eventually

Question

Quizplus · Accepted Answer

When unemployment is below its natural rate, it indicates that the labor market is tight, and employers may need to offer higher wages to attract workers. This leads to an increase in production costs and, eventually, an increase in prices, resulting in inflation. Therefore, when unemployment is below its natural rate, the inflation rate will eventually increase.

When Unemployment Is Below Its Natural Rate,the Inflation Rate Will