Suppose the Natural Rate of Unemployment Is 4 Percent

Multiple Choice

Suppose the natural rate of unemployment is 4 percent.Then suppose that Parliament passes laws that make the labour market less flexible,so the natural rate of unemployment rises to 5 percent.If the sacrifice ratio is 3,how much is the inflation rate that is consistent with the increased natural level of unemployment,such that there is no loss in output growth?

A) 2 percent
B) 4 percent
C) 6 percent
D) 8 percent