All of the following tends to occur when unemployment is above the natural rate EXCEPT:
A)wage increases will be limited
B)inflation will rise
C)increases in the cost of production will be limited
D)there is slack in the labor market

Question

Quizplus · Accepted Answer

When unemployment is above the natural rate, inflation tends to be lower because there is less upward pressure on wages and prices due to the excess supply of labor. Therefore, option B is incorrect. A, C, and D are all correct statements that tend to occur when unemployment is above the natural rate.

All of the Following Tends to Occur When Unemployment Is