Suppose that last year the unemployment rate was 5 percent and the inflation rate was 2.5 percent. If the natural rate of unemployment is 5 percent, how do you expect inflation to change?

What will be an ideal response?

Inflation is stable when the unemployment rate is equal to the natural rate of unemployment. Since last year's unemployment rate was equal to the natural rate of unemployment, the inflation rate should not change.

Economics

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Unlimited liability is found in

A) proprietorships and corporations. B) partnerships and corporations. C) proprietorships and partnerships. D) proprietorships, partnerships, and corporations.

Economics

Starting from an initial long-run equilibrium, under the rational expectations hypothesis, an anticipated shift to a more expansionary policy will increase:

a. prices but not real output in the short run. b. real output but not prices in the short run. c. real output in the long run but not in the short run. d. real output in both the long run and the short run.

Economics