Suppose Policymakers Underestimate the Natural Rate of Unemployment

Multiple Choice

Suppose policymakers underestimate the natural rate of unemployment. In a situation like this, policymakers might implement a policy that:

A) results in deflation.
B) attempts to maintain output below the natural level of output.
C) results in steadily decreasing inflation.
D) attempts to maintain output at the natural level of output.
E) results in steadily increasing inflation.