Natural rate of unemployment is the rate of unemployment at which :
In the expectations-augmented Phillips curve π−πᵉ=−β(u−uₙ), unemployment at the natural rate produces no systematic inflation acceleration when expectations adjust. Thus…
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Natural rate of unemployment is the rate of unemployment at which :
Answer and explanation
Correct answer A
In the expectations-augmented Phillips curve π−πᵉ=−β(u−uₙ), unemployment at the natural rate produces no systematic inflation acceleration when expectations adjust. Thus stable inflation is the standard answer; rising or falling inflation indicates a deviation in this simple model.
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UGC NET Economics