Only when the unemployment rate is equal to the nonaccelerating inflation rate of unemployment (NAIRU) is the price level changing at a constant rate.

Question

Quizplus · Accepted Answer

This statement is true. NAIRU is the level of unemployment below which inflation tends to increase and above which inflation tends to decrease. When the unemployment rate is equal to NAIRU, there is no upward or downward pressure on inflation, which means the price level is changing at a constant rate.

Only When the Unemployment Rate Is Equal to the Nonaccelerating