Picture an economy that is in general equilibrium.What would happen if the natural rate of unemployment were to experience a decrease?
A)according to the Phillips curve,the ensuing negative unemployment gap would exert inflationary pressures
B)according to Okun's Law,the ensuing negative unemployment gap would be consistent with a positive output gap
C)according to the AD-AS framework,the LRAS curve would shift to the right and the ensuing output gap would have to be closed by subsequent rightward shifts in the AS curve to a lower equilibrium level of inflation
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The Answer of Picture an economy that is in general equilibrium.What would happen if the natural rate of unemployment were to experience a decrease?
A)according to the Phillips curve,the ensuing negative unemployment gap would exert inflationary pressures
B)according to Okun's Law,the ensuing negative unemployment gap would be consistent with a positive output gap
C)according to the AD-AS framework,the LRAS curve would shift to the right and the ensuing output gap would have to be closed by subsequent rightward shifts in the AS curve to a lower equilibrium level of inflation
D)all of the above
E)none of the above

Picture an Economy That Is in General Equilibrium