In an economy where actual real GDP is always equal to the natural real GDP,inflation
A)settles down to zero percent.
B)is at the same rate as GDP growth.
C)is constant at a rate that can be low or high.
D)fluctuates around an average of zero percent.

Question

Quizplus · Accepted Answer

In an economy where actual real GDP is always equal to the natural real GDP, inflation is constant at a rate that can be low or high. This is because the economy is operating at its full capacity, and any changes in demand are met with proportional changes in prices, leading to a stable inflation rate.

In an Economy Where Actual Real GDP Is Always Equal