Suppose that the unemployment rate is at 5% and the inflation rate is 2%. Assuming that both of these values remain the same for a period of years, it can be said that the ______

I. non-accelerating inflation rate of unemployment is 5%.
II. natural rate of unemployment is 5%.

Correct Answer: Both I and II

The non-accelerating inflation rate of unemployment is the specific level of unemployment that exists in an economy that does not cause inflation to increase. When unemployment is under 5%, it is natural for an inflation rate of 2% to correspond with it.