Under Which of the Following Conditions Will the Actual Rate

question 48

Multiple Choice

Under which of the following conditions will the actual rate of unemployment tend to rise above the natural rate of unemployment?

• A) Prices are stable and have been for the last four years.
• B) Inflation is 3 percent and was widely anticipated more than a year ago.
• C) Expansionary monetary policies lead to an unexpected increase in inflation from 3 percent to 7 percent.
• D) Restrictive monetary policies lead to an unexpected reduction in inflation from 6 percent to 2 percent.

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Definitions:

Net Income

The earnings of a company after all expenses, including taxes and operational costs, have been deducted from revenues, reflecting the company's profit.

Accounts Receivable

The amount that debtors are required to pay to a company for the goods or services they have received but have not yet compensated for.

Accounts Payable

Obligations of a business to pay for goods or services that have been delivered but not yet paid for.

Inventory

The total amount of goods and materials a company holds for the purpose of resale or production, including raw materials, work-in-progress, and finished goods.