No, 7 is C...hidden employment reducing is irrelevant because it is HIDDEN, hence not calculated by the ABS!! This is from Dixon Text book - Once NAIRU is reached...any further stimulus to aggregate demand will not lead to permanent reductions in unemployment....leading to higher inflation...runnable said:Sry 7 = a
because
For 7, unemployment will increase because hidden unemployment will decrease due to better economic conditions, hence increasing unemployment in the short run.
Why would he say non-permanent reduction?? because the immediate effect of increased AD at NAIRU causes a short term unsustainable decrease in unemployment that will eventually increase again later! The question asked for the IMMEDIATE EFFECT and not delayed....so hence forth, it is C