If an Economy's Resources Are Fully Employed

question 25

Multiple Choice

If an economy's resources are fully employed,

• A)a great deal of unemployment will be needed to achieve even a small reduction in inflation.
• B)the aggregate supply curve (and thus the Phillips curve) will be flat.
• C)the aggregate supply curve (and thus the Phillips curve) will be steep.
• D)Both a and c are correct.

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Definitions:

Horizontal Line

A straight line that moves left to right (or right to left) on a graph and has a slope of zero, indicating no change in the variable it measures.

Marginal Revenue

The increased earnings from the sale of one more unit of a product or service.

Total Revenue

The overall financial gain a business obtains from the sale of goods or delivery of services within a specific timeframe.

Competitive Price-searcher

A market situation where firms have some control over their prices because their products are differentiated, leading them to search for competitive pricing strategies.