Among other things, what determines the long-run average unemployment rate and inflation, respectively?
A) the market power of unions; government spending
B) efficiency wages; the money supply growth rate
C) the rate of growth of the money supply; the market power of unions
D) the minimum wage; the extent to which firms are competitive

Question

Quizplus · Accepted Answer

Efficiency wages can determine the long-run average unemployment rate as they may motivate workers to work harder and be more productive, which reduces the likelihood of layoffs. The money supply growth rate can determine inflation as an increase in the money supply can lead to more money chasing the same amount of goods and services, causing prices to increase.

Among Other Things, What Determines the Long-Run Average Unemployment Rate