Refer to the Above Diagram for a Specific Economy

question 87

Multiple Choice

Refer to the above diagram for a specific economy.Which of the following best describes the relationship shown by this curve?

• A)The demand for labor is large when the rate of inflation is small.
• B)When the rate of unemployment is high, the rate of inflation is high.
• C)The rate of inflation and the rate of unemployment are inversely related.
• D)The rate of inflation and the rate of unemployment are directly related.

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Definitions:

Total Fixed Cost

The sum of all costs that do not change with the level of output or activity over a short period, such as rent, salaries, and equipment maintenance costs.

Average Total Cost

The total cost of production divided by the number of units produced.

Implicit Costs

The opportunity costs of using resources owned by the firm for its project instead of selling or renting them to others.

Fixed Costs

Costs that do not vary with the level of production or output, such as rent, salaries, and insurance.