Question 1
The measured unemployment rate can be pushed below the natural rate, but
◦ only in the long run and only if the price level is constant.
◦ only in the long run and not without inflation.
◦ only in the short run and only if the price level is constant.
◦ only in the short run and not without inflation.
Question 2
If the economy is at potential output, actual inflation
◦ is greater than expected inflation.
◦ equals expected inflation.
◦ is less than expected inflation.
◦ equals the natural rate of unemployment.