The long run natural rate of unemployment is 5%. The current rate of unemploymen

Question

The long run natural rate of unemployment is 5%. The current rate of unemployment is 3% what do we expect to happen if no policy is used.

If no policy is used in the long run we would expect unemployment to [increase, decrease, stay the same]

If no policy is used in the long run we would expect the CPI to [increase, decrease, stay the same]

A. Both unemployment and CPI increase

B. Unemployment increases and CPI decreases

C.Unemployment decreases and CPI decreases

D. Unemployment decreases and CPI increase

Explanation / Answer

If no policy is used in the long run we would expect unemployment, CPI to:

A. Both unemployment and CPI increase.

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