The Natural Rate Hypothesis States That When the Inflation Rate

Multiple Choice

The natural rate hypothesis states that when the inflation rate

A) increases, the unemployment rate will decrease permanently.
B) decreases, the inflation rate will decrease permanently.
C) changes, the unemployment rate changes temporarily and eventually returns to the natural unemployment rate.
D) changes, the change is only temporarily and eventually the inflation rate returns to the natural inflation rate.
E) increases, the natural unemployment rate increases.