According to the natural rate hypothesis,unemployment can
A)never be maintained below the natural rate
B)be maintained below the natural rate only at the cost of higher taxes
C)be maintained below the natural rate while maintaining a constant low inflation rate
D)be maintained below the natural rate only at the cost of ever-increasing inflation
E)be maintained below the natural rate only at the cost of ever-increasing federal budget deficits

Question

Quizplus · Accepted Answer

According to the natural rate hypothesis, unemployment can be maintained below the natural rate only at the cost of ever-increasing inflation, as attempts to keep unemployment below its natural level can lead to accelerating inflation.

According to the Natural Rate Hypothesis,unemployment Can