According to the natural rate hypothesis:
a. a short-term as well as long-term trade-off exists between unemployment and inflation
b. economic fluctuations are the result of external negative and positive productivity shocks to the economy
c. workers and consumers incorporate the likely consequences of government policy changes into their expectations by quickly adjusting wages and prices.
d. the economy will self-correct to the natural rate of unemployment.
d
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Suppose the production of helicopters is an industry characterized by increasing returns to scale and an Argentine firm, Cicare, is the only player in this market. The firm caters to the global market and earns a profit of $10 million. Flettner, a German firm has been considering entering this market for a while, but it is aware that its entry will cause each firm to lose about $4 million
Although a government subsidy allows Flettner to enter the helicopter market, the company is unable to reap profits in the long run. Which of the following could have led to this outcome? a. Flettner experienced high production costs due to inadequate supply of inputs. b. New firms had entered the helicopter industry. c. The German government ran a balance of payment deficit. d. The Argentine government retaliated by subsidizing Cicare. e. There was very low investment in research and development in this industry.
Per capita GDP, a measure of worker productivity, reflects: a. the average quantity of goods and services available per person in a nation
b. the dollar value of a nation's output produced by an average worker in one hour. c. the economic growth rate of a nation adjusted for inflation. d. the ratio of inputs to the total output of an economy.