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:

Modus Ponens (MP)

A logical argument form that asserts if a conditional statement ("if p then q") is accepted, and the antecedent (p) holds, then the consequent (q) must also hold.

Modus Ponens (MP)

A form of logical argument where if a conditional statement ("if P, then Q") is accepted, and the antecedent (P) is affirmed, the consequent (Q) must also be affirmed.

Proof 1

A logical or mathematical demonstration showing that a specific statement or theorem is true, based on accepted axioms and inference rules.

Proof 2

An alternative term generally meaning evidence or argument establishing a fact or the truth of a statement.