Suppose That an Economy Experiences an Increase in the Unemployment

question 45

Multiple Choice

Suppose that an economy experiences an increase in the unemployment rate and a decline in
The inflation rate simultaneously. This situation would be consistent with a movement along a

• A) vertical Phillips curve.
• B) horizontal Phillips curve.
• C) positively sloped Phillips curve.
• D) negatively sloped Phillips curve.

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in the open market.

Differentiated Products

Products distinguished from similar products by characteristics like quality, design, location, and method of promotion.

Variable Costs

Costs that change in proportion to the goods or services that a business produces, such as materials and labor.

Total Cost

The costs, both explicit and implicit, of all the resources used by the firm. Total cost includes a normal rate of return for the firm’s equity capital.