Each of the following is one of the factors determining the economy's equilibrium inflation and unemployment rates except
A) the natural level of the interest rate.
B) the central bank's target level of inflation.
C) whether there are any supply shocks affecting inflation.
D) the slope of the monetary policy reaction function.

Question

Quizplus · Accepted Answer

The natural level of the interest rate primarily influences the overall economic activity rather than directly determining the economy's equilibrium inflation and unemployment rates. Factors like the central bank's inflation target, supply shocks, and the monetary policy reaction function more directly influence inflation and unemployment equilibrium.

Each of the Following Is One of the Factors Determining