When unexpected inflation is zero, the corresponding unemployment rate is the _____ unemployment rate.
A)zero
B)minimum
C)equilibrium
D)maximum

Question

Quizplus · Accepted Answer

The equilibrium unemployment rate is the level of unemployment at which the labor market is in balance, with supply and demand for labor being equal. This implies that there is no upward or downward pressure on wages, and hence, no unexpected inflation. Therefore, when unexpected inflation is zero, the corresponding unemployment rate is the equilibrium unemployment rate.

When Unexpected Inflation Is Zero, the Corresponding Unemployment Rate Is