Which of the following is a characteristic of the 'Natural Rate Hypothesis'?
A. There is a permanent trade-off between inflation and unemployment
B. In the long run, unemployment returns to its natural rate regardless of the inflation rate
C. Monetary policy can permanently reduce unemployment below the natural rate
D. Only adaptive expectations are assumed
Answer: Option B
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:
An outward shift of the PPF indicates economic growth, which can result from an increase in the quantity or quality of resources or from technological progress.
Explanation:
Lifelong learning refers to the ongoing, voluntary and self-motivated pursuit of knowledge and skills throughout life, which becomes increasingly important as technological change accelerates the obsolescence of existing skills.
Explanation:
Algorithmic transparency concerns the extent to which the logic, data and outcomes of algorithmic systems are open to inspection, explanation and accountability by users, regulators or the public.
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