Under Which of the Following Conditions Will the Actual Rate

Multiple Choice

Under which of the following conditions will the actual rate of unemployment tend to rise above the natural rate of unemployment?

A) Prices are stable and have been for the last four years.
B) Inflation is 3 percent and was widely anticipated more than a year ago.
C) Expansionary monetary policies lead to an unexpected increase in inflation from 3 percent to 7 percent.
D) Restrictive monetary policies lead to an unexpected reduction in inflation from 6 percent to 2 percent.