Refer to the Above Diagram

question 103

Multiple Choice

Refer to the above diagram.Assume that the natural rate of unemployment is 7.5 percent and that the economy is initially operating at point a where the expected and actual rates of inflation are each 6 percent.In the long run, the decline in the actual rate of inflation from 6 percent to 4 percent will:

• A)reduce the unemployment rate.
• B)reduce corporate profits in real terms.
• C)have no effect on the unemployment rate.
• D)reduce real domestic output.

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Definitions:

Receivables Financing

A form of financing where a company uses its accounts receivable as collateral to obtain a loan or advance, improving cash flow.

Variable Cost Per Unit

The cost that varies with the level of output or production, such as materials and labor, calculated on a per unit basis.

Monthly Interest Rate

Monthly interest rate refers to the percentage of interest that is charged or earned on a loan or investment for each month.

Net 30 Policy

A payment term that indicates the buyer must pay the full amount due within 30 days of the invoice date.