If the inflation rate is lower than the expected inflation rate,
A)unemployment is above the natural rate.
B)the natural unemployment rate will increase.
C)the expected inflation rate will increase.
D)unemployment is below the natural rate.
E)the economy is not operating on the short-run Phillips curve.

Question

Quizplus · Accepted Answer

When the inflation rate is lower than expected, it typically indicates that demand is weaker than anticipated, leading to higher unemployment above the natural rate.

If the Inflation Rate Is Lower Than the Expected Inflation