Refer to the Above Diagram

question 80

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.If the actual rate of inflation unexpectedly falls from 6 percent to 4 percent, then the unemployment rate will:

• A)temporarily fall from 7.5 percent to 4 percent.
• B)permanently fall from 7.5 percent to 4 percent.
• C)temporarily rise from 7.5 percent to 9.5 percent.
• D)permanently rise from 7.5 percent to 9.5 percent.

---

Definitions:

Bushel

A bushel is a unit of volume that is used primarily for measuring quantities of agricultural produce, such as grains, fruits, and vegetables.

Consumption

The process or activity of using goods and services to satisfy personal or collective wants or needs.

Wage Rate

The standard amount of pay given for work performed, typically expressed per hour, day, or unit of work.

Labor Income

The compensation received by individuals for their work efforts, often in the form of wages, salaries, or other earnings.