If the actual rate of inflation is only 3%, the unemployment rate will probably increase. The reason for this is that the prices of goods and services will relative to resource prices. In the short run, profit margins will and firms will output, which will cause layoffs, and increase unemployment. Why would the unemployment rate probably increase if the actual rate of inflation next year is only 3%? a. Prices of goods and services will increase relative to resource prices. In the short run, profit margins will increase and firms will cut back on output. This will cause layoffs and increase unemployment.
b. Prices in the goods and services will fall relative to resource prices. In the short run, profit margins will fall and firms will cut back on output. This will cause layoffs and increase unemployment.