Question

If the actual unemployment rate is above the​ NAIRU, the change in the inflation rate will...

If the actual unemployment rate is above the​ NAIRU, the change in the inflation rate will be negative. A. False B. True

The price level will be decelerating when the actual unemployment rate is below the NAIRU. A. False B. True

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Answer #1

Question 1

NAIRU implies non-accelerating inflation rate of unemployment.

There exists a relationship between NAIRU and actual unemployment rate.

When actual unemployent rate is above the NAIRU then in that case inflation decelerate. This implies that growth rate of inflation will be negative.

On the other hand, when actual unemployment rate is below the NAIRU then in that case inflation accelerates. This implies that growth rate of inflation will be positive.

Thus, it can be stated that if the actual unemployment rate is above the NAIRU, the change in the inflation rate will be negative.

Thus, the given statement is True.

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