Question

If the unemployment rate is above the natural rate of unemployment, holding other factors constant, what will happen to inflation and output?

Short answer

There will be a lack of labour within the business thanks to which implicit affair of the frugality will go below, If the severance rate remains above the natural severance rate. within the short run, aggregate force wind will shift to the downcast. It implies that there'll be lower affectation and better affair. this case remains till that point, until frugality reaches to long term equilibrium.

Step-by-step solution

Concept Introduction   

The aggregate claim is the global claim of the frugality for the latest goods and mercies at a given away point of your moment. The aggregate reservoir is the total quantum of most wares and graces that are outfitted into the request of frugality in veritably individual menstruation of your moment.

Explanation of Solution  

Affectedness is the shape of the frugality when the valuation of everything increases fast because of which nonemployment and fruit of the frugality decrease.
The rate of severance is that a part of the labour pool is unemployed. the speed of severance may be expressed within the term of chance.
Still, also there'll be a lack of labour within the business thanks to which implicit affair of the frugality will go below. If the severance rate remains above the natural severance rate. within the short run, aggregate force wind will shift to the downcast. It implies that there'll be lower affectation and better affairs. This case remains till that point until frugality reaches long term equilibrium.