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Suppose That the Inflation Rate Has Been 3 Percent Per

Question 35

Multiple Choice

Suppose that the inflation rate has been 3 percent per year for several years, and the unemployment rate has been stable at 5 percent. Unanticipated changes in government policy cause the inflation rate to increase to 6 percent. In the short run, we would expect the unemployment rate to


A) remain constant.
B) increase to 10 percent.
C) increase, but the exact amount cannot be known for sure.
D) decrease.

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