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.

---

Definitions:

Marginal Cost

The increase in expenses associated with the production of an extra good or service unit.

Price Discrimination

A pricing strategy where a firm sells the same product at different prices to different groups of consumers, based on their willingness to pay, without any differences in production cost.

College ID Cards

Identification cards issued by colleges or universities to students, faculty, and staff to access campus facilities and services.

Ice Cream Store

A retail shop specializing in selling ice cream and related desserts.