Which Statement Is Consistent with the Tenth Principle of Economics

question 113

Multiple Choice

Which statement is consistent with the tenth principle of economics?

• A) If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will temporarily fall.
• B) If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will temporarily rise.
• C) If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will permanently fall.
• D) If we increase the rate of inflation from 3 percent to 6 percent, then the rate of unemployment will permanently rise.

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Definitions:

Profit-Maximizing

A strategy or process where a firm determines the price, output level, or operational efficiency that will yield the highest possible profit.

Nondiscriminating Monopolist

A monopolist who charges the same price to all consumers for its products, regardless of differences in demand or willingness to pay.

Allocative Efficiency

Achieved when resources are distributed in a way that maximizes the net benefit to society, ensuring that each good is produced up to the point where the last unit provides a marginal benefit equal to the marginal cost of producing it.

Regulation Dilemma

The challenge of finding the balance between necessary government intervention in markets to correct failures and excessive regulation that may stifle competition and innovation.