Which of the following is a characteristic of the 'Natural Rate Hypothesis'?
A. Only adaptive expectations are assumed
B. There is a permanent trade-off between inflation and unemployment
C. Monetary policy can permanently reduce unemployment below the natural rate
D. In the long run, unemployment returns to its natural rate regardless of the inflation rate
Answer: Option D
Solution (By JKSSB Mock Tests)
The natural rate hypothesis, associated with Friedman and Phelps, states that in the long run the economy returns to the natural rate of unemployment and there is no permanent trade-off with inflation.
Explanation:
Disinvestment involves the sale of government-held shares in public sector enterprises to private entities or the public, reducing government ownership.
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