Answer on Macroeconomics Question for Heidi
and interdependence is inversely proportional, ie, with decreasing inflation
increases unemployment and vice versa. Thus, establishing natural rate
determined desire to find the optimal ratio between the two phenomena. Thus,
reducing unemployment below the natural rate will lead to a significant increase
in inflation will cause a negative impact on the economy, which override the
positive effects of reducing unemployment. Therefore, reduction of unemployment
below the natural rate is undesirable.
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