In the short run, unanticipated inflation typically leads to

A. higher rates of unemployment.
B. decreases in aggregate demand.
C. workers' thinking the real wage has been reduced.
D. lower rates of unemployment.


Answer: D

Economics

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A decrease in the price level will cause:

A. the short-run aggregate supply curve to shift to the right. B. the aggregate demand curve to shift to the right. C. a movement rightward along the short-run aggregate supply curve. D. the long-run aggregate supply curve to shift to the right.

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Other things remaining the same, in the long-run as compared to the short-run

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Using Figure 1.3 and starting from PP1, an increase in the capacity to produce can be represented by a movement from

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