According to the natural-rate hypothesis, output will be at the natural rate:
A)if inflation exceeds expected inflation.
B)if inflation falls below expected inflation.
C)if inflation meets expectations in the short run.
D)if aggregate demand affects output in the long run.

Question

Quizplus · Accepted Answer

According to the natural-rate hypothesis, output will be at the natural rate when inflation meets expectations in the short run, as this implies that there are no unexpected changes in inflation affecting output.

According to the Natural-Rate Hypothesis, Output Will Be at the Natural