EBK THE ECONOMICS OF MONEY, BANKING AND
EBK THE ECONOMICS OF MONEY, BANKING AND
4th Edition
ISBN: 8220100668203
Author: Mishkin
Publisher: PEARSON
Question
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Chapter 24, Problem 20Q
To determine

To Explain:

The situation where the policymakers mistakenly believe that natural rate of unemployment is 7% whereas it is actually 5% and therefore they pursue stabilization policy.

Concept introduction:

Natural Rate of Unemployment: The level of unemployment that is determined by the structural and frictional forces of economy. It is that level of unemployment that nonetheless remains at the full employment.

Stabilization Policy: The policies that are used to manage the fluctuation in the level of economic activities.

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