Answer to Question #80811 in Macroeconomics for AYANDA

Question

What will happen to the unemployment rate and the inflation rate if the SARB decides to increase the interest rate?

1) The unemployment rate will decrease and the inflation rate will increase
2) The unemployment rate will increase and the inflation rate will decrease
3) Both the unemployment rate and the inflation rate will increase
4) Both the unemployment rate and the inflation rate will decrease

Answer 1

2) The unemployment rate will increase and the inflation rate will decrease