Refer to the diagram. Assume that the natural rate of unemployment is 5 percent and that the economy is initially operating at point a, where the expected and actual rates of inflation are each 6 percent. If the actual rate of inflation unexpectedly falls from 6 percent to 4 percent, then the unemployment rate will:
A. temporarily fall from 5 percent to 4 percent.
B. permanently fall from 5 percent to 4 percent.
C. temporarily rise from 5 percent to 7 percent.
D. permanently rise from 5 percent to 7 percent.
C. temporarily rise from 5 percent to 7 percent.
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Which of the following is true when a Nash equilibrium is reached in a duopoly with homogeneous products?
A) Both the firms earn positive economic profits. B) Each firm charges a price equal to its average fixed cost. C) Both the firms earn zero economic profits. D) Both firms incur huge losses.
If purchasing-power parity holds, the price level in the U.S. is 140, and the price level in Canada is 120, which of the following is true?
a. the real exchange rate is 120/140. b. the real exchange rate is 140/120. c. the nominal exchange rate is 120/140 d. the nominal exchange rate is 140/120
The Doing Business As name identifies a company for:
a. Bank accounts b. Sales c. Patents d. None of these
Altruism describes:
A. a motive for action in which a person's utility is increased when another's utility increases. B. a motive for action in which a person's utility becomes negative when another's utility increases. C. a motive for action in which a person's utility is decreased when another's utility increases. D. a motive for action in which a person's utility is unaffected when another's utility increases.