Use the following Phillips curve equation to answer this question: πt - πt-1 = (m + z)- αut.Which of the following will cause an increase in the natural rate of unemployment?

Question

Quizplus · Accepted Answer

An increase in z will cause an increase in the natural rate of unemployment, as it represents an increase in structural factors that impede the efficiency of the labor market. The other options - a reduction in m, an increase in α, or a reduction in expected inflation - would decrease the natural rate of unemployment.

Use the Following Phillips Curve Equation to Answer This Question