The "acceleration" property states by definition that
A) the unemployment rate must exceed the natural rate if actual GDP falls short of its potential.
B) the unemployment rate must fall short of the natural rate if actual GDP exceeds its potential.
C) the unemployment rate is independent of any accelerated inflation caused by outside price shocks.
D) any attempt to keep actual GDP above its potential must produce accelerating rates of inflation.
E) unemployment can be maintained at the natural rate even given accelerating inflation.

Question

Quizplus · Accepted Answer

The "acceleration" property, as it relates to the Phillips curve, suggests that maintaining actual GDP above its potential level leads to accelerating inflation, not just a one-time increase in the price level. This is because persistent demand pressures in an economy operating above its potential tend to cause continuous and increasing rates of inflation.

The "Acceleration" Property States by Definition That