If the misery index is 12 and the inflation rate is 4 percent,we can conclude
A)The inflation rate will quickly rise by 8 percent.
B)The unemployment rate must be 8 percent.
C)The AD curve must be shifting to the right.

Question

Quizplus · Accepted Answer

The misery index is calculated by adding the inflation rate and the unemployment rate. Therefore, if the misery index is 12 and the inflation rate is 4 percent, the unemployment rate must be 8 percent (12 - 4 = 8). Option A is incorrect because there is no information provided about the future inflation rate. Option C is incorrect because there is no information provided about changes in the AD curve.

If the Misery Index Is 12 and the Inflation Rate