What is the natural rate hypothesis?
What will be an ideal response?
The natural rate hypothesis is the proposition that when the inflation rate changes, the unemployment rate changes temporarily. Eventually, however, the unemployment rate returns to the natural unemployment rate.
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The U.S. government will probably return soon to a system of paper money backed by gold
a. True b. False Indicate whether the statement is true or false
A Starbucks Grande Latte costs $3.75 in the U.S. and 28 yuan in China. The nominal exchange rate is 6.75 yuan per dollar. The real exchange rate is
a. 1.106 . If purchasing-power parity held the nominal exchange rate would be higher. b. 1.106 . If purchasing-power parity held the nominal exchange rate would be lower. c. .904 . If purchasing power parity held the nominal exchange rate would be higher. d. .904 . If purchasing-power parity held the nominal exchange rate would be lower.