Inflation Rate (%) PCLR -PC₂ Multiple Choice PC₁ 7 Unemployment Rate (%) Refer to the diagram. Assume that the natural rate of unemployment is 5 percent and that the economy is initially operating at point a where the expected and actual rates of inflation are each 6 percent. If the actual rate of inflation unexpectedly falls from 6 percent to 4 percent, then the unemployment rate will Opermanently fall from 5 percent to 4 percent permanently rise from 5 percent to 7 percent.

ENGR.ECONOMIC ANALYSIS
14th Edition
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Chapter1: Making Economics Decisions
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Inflation Rate (%)
4
PCLR
с
45 7
Unemployment
Multiple Choice
-PC₂
PC₁
Rate (%)
Refer to the diagram. Assume that the natural rate of unemployment is 5 percent and that the economy is initially operating at point a where the
expected and actual rates of inflation are each 6 percent. If the actual rate of inflation unexpectedly falls from 6 percent to 4 percent, then the
unemployment rate will
Opermanently fall from 5 percent to 4 percent.
Help
permanently rise from 5 percent to 7 percent.
Transcribed Image Text:Inflation Rate (%) 4 PCLR с 45 7 Unemployment Multiple Choice -PC₂ PC₁ Rate (%) Refer to the diagram. Assume that the natural rate of unemployment is 5 percent and that the economy is initially operating at point a where the expected and actual rates of inflation are each 6 percent. If the actual rate of inflation unexpectedly falls from 6 percent to 4 percent, then the unemployment rate will Opermanently fall from 5 percent to 4 percent. Help permanently rise from 5 percent to 7 percent.
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