Consider an Economy That Is Operating at the Intersection of the Long-Run

question 99

Multiple Choice

Consider an economy that is operating at the intersection of the long-run and short-run Phillips curve. The level of inflation is 2.5 per cent, while the level of unemployment is 3.8 per cent. This implies that:

• A) the economy is operating at a point inside its production possibility frontier.
• B) any increase in interest rates at this point will move the economy up along the short-run
• C) any increase in aggregate demand at this point will move the economy down along the short-run Phillips curve.
• D) the natural rate of unemployment in this economy is 3.8 per cent.

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Definitions:

Work Time

The duration or period during which an employee is considered to be on duty or performing activities related to their job.

Strikes

Work stoppages initiated by employees to press for better wages, conditions, or other labor issues.

Union Membership

The status of being a member of a labor union, which is an organization that represents the collective interests of workers in negotiations with employers over wages, benefits, and working conditions.

Unionization Rate

The proportion of workers in a workforce or industry that are members of a labor union, reflecting organized labor's prevalence.