The Natural Rate Hypothesis States That When the Inflation Rate

question 20

Multiple Choice

The natural rate hypothesis states that when the inflation rate _{--------------------} , in the short run the unemployment rate_{--------------------} and in the long run the unemployment rate_{--------------------}.

• A)falls, decreases; returns to the natural unemployment rate
• B)rises, decreases; returns to the natural unemployment rate
• C)falls, decreases; decreases
• D)rises, decreases; decreases
• E)falls, increases; decreases

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Definitions:

Breakeven Point

The point at which total cost and total revenue are equal, meaning no net loss or gain, and the business is not making a profit.

Price Ceiling

A government-imposed limit on the price charged for a product, to ensure that it remains affordable for consumers.

Price Floor

A minimum price set by the government or an organization for a particular good or service, below which it cannot be sold.

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded for a given period, with price on the vertical axis and quantity on the horizontal axis.