Refer to the Diagram

question 120

Multiple Choice

Refer to the diagram. Assume that the natural rate of unemployment is 5 percent and that the economy is initially operating at point a, where the expected and actual rates of inflation are each 6
Percent. In the long run, the decline in the actual rate of inflation from 6 percent to 4 percent will

• A) reduce the unemployment rate.
• B) reduce corporate profits in real terms.
• C) have no effect on the unemployment rate.
• D) reduce real domestic output.

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Definitions:

Annulment

A court decree that invalidates (nullifies) a marriage. Although the marriage itself is deemed non-existent, children of a marriage that is annulled are deemed legitimate.

Terminated

Ended or concluded, often used in the context of employment to indicate that a worker's job position has been ended by the employer.

Notary Public

A public official authorized to witness the signing of legal documents and administer oaths, to help prevent fraud.

Bigamy

The act of entering into marriage with one person while still legally married to another.