According to the analysis of the short run and long run Phillips curves in the text, a persistent inflation rate of 10% per year:
a. Would keep unemployment below the natural rate
b. Would keep unemployment above the natural rate.
c. Would result in unemployment at the natural rate of unemployment.
d. Is consistent with any of the above scenarios.
c
Economics
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What will be an ideal response?
Economics
As inflation drives up prices, people attempt to find substitutes and adjust what they buy. The resulting substitution bias problem causes the CPI to
a. overstate the impact of higher prices on consumers. b. consistently underestimate the true inflation rate. c. omit the benefits of product quality improvements. d. have larger fluctuations than other price indexes.
Economics