Refer to the Graphs

question 247

Multiple Choice

Refer to the graphs. Assume that the economy starts out at point D in Graph 2, whereas full employment would be attained at point C. The Phillips curve shown suggests that full employment

• A) can be attained only with a higher inflation rate.
• B) may be attained along with a lower inflation rate.
• C) cannot be attained regardless of inflation rate.
• D) can be attained by implementing restrictive fiscal or monetary policy.

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Definitions:

Break-even Point

The point at which total revenues equal total expenses, indicating that a business is neither making a profit nor incurring a loss.

Variable Costs

Expenses that change in proportion to the activity of a business, such as material or labor costs related to production levels.

Budgeted Salary

A predetermined amount of money allocated for salaries over a specific period, used for planning and controlling payroll expenses.

Break-even Point

The break-even point is the level of production or sales at which total revenues equal total expenses, resulting in neither profit nor loss.