Suppose We Know the Following Information About a Hypothetical Economy

Multiple Choice

Suppose we know the following information about a hypothetical economy: - actual unemployment rate = 6%
- NAIRU = 8%
- inflation rate = 4%
If the central bank tries to maintain the current output gap,we can expect the inflation rate to

A) remain constant at 4%.
B) fall below 4%.
C) rise above 4%.
D) cause stagflation.
E) cause a recession.