Suppose the Economy Is Producing at the Natural Rate of Output

Multiple Choice

Suppose the economy is producing at the natural rate of output and the government passes legislation that severely restricts a company's ability to reduce production costs via outsourcing. Everything else held constant,this policy action will cause ________ in the unemployment rate in the short run and ________ in inflation in the short run.

A) an increase;an increase
B) a decrease;a decrease
C) a decrease;an increase
D) no change;no change