If policymakers attempt to reduce the rate of unemployment below its natural rate

Name: If policymakers attempt to reduce the rate of unemployment below its natural rate
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Question

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The natural rate of unemployment is the rate at which there is no upward or downward pressure on inflation. If policymakers attempt to reduce unemployment below the natural rate, it is likely that the economy will begin to overheat and inflation will increase. Therefore, they run the risk of inflation.

If Policymakers Attempt to Reduce the Rate of Unemployment Below