When an Economy Is in Recession, the Unexpected Inflation Rate

question 20

Multiple Choice

When an economy is in recession, the unexpected inflation rate will be:

• A) positive.
• B) zero.
• C) negative.
• D) the natural rate.

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Definitions:

Specialization

Concentration of production on a limited range of goods or services to increase efficiency and productivity, often leading to increased trade between economies.

Lemonade

A sweetened beverage made from lemon juice, water, and sugar, often served cold.

Pizzas

A savory dish of Italian origin, consisting of a round, flattened base of leavened wheat-based dough topped with tomatoes, cheese, and often various other ingredients, baked at a high temperature, traditionally in a wood-fired oven.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two or more goods, given a set of inputs.