When the unemployment rate is above the natural rate of unemployment, the inflation rate typically decreases. When the unemployment rate is below the natural rate of unemployment, the inflation rate typically increases.Group of answer choicesBoth statements are trueThe first statement is true, the second is falseThe first statement is false, the second is trueBoth statements are false

Which of the following will NOT cause an increase in the natural rate of unemployment? Group of answer choices an increase in the markup, m an increase in unemployment benefits (included in z) an increase in the expected inflation rate a reduction in the response of wages to unemployment, α none of the above

If expected inflation this year is equal to last year's inflation, and the unemployment rate has been equal to the natural rate of unemployment for the past few years, we know that:Group of answer choicesInflation rate should steadily decreaseInflation rate should steadily increaseInflation rate should remain steadyInflation rate should be zero

Natural rate of unemployment is equal to:Group of answer choicesFrictional unemployment plus structural unemploymentFrictional unemployment plus cyclical unemploymentStructural unemployment plus cyclical unemploymentNone of the above

Decreasing interest rates tend toGroup of answer choicesIncrease aggregate demandAll options are correctLower inflationCause unemployment

According to the bathtub model of unemployment, which of the following statements is true if a law permanently increases only the job finding rate?Group of answer choicesThe unemployment rate will rise, but the natural rate of unemployment will be unchanged.The natural rate of unemployment will rise.The unemployment rate will fall, but the natural rate of unemployment will be unchanged.The natural rate of unemployment will fall.