The Inverse Relationship Between the Inflation Rate and the Unemployment

question 35

Multiple Choice

The inverse relationship between the inflation rate and the unemployment rate is a result of the assumption that

• A) all inflation is demand-side inflation.
• B) as the unemployment rate falls, demand for products and resources decreases.
• C) as the unemployment rate rises, bottlenecks occur throughout the economy.
• D) there is a significant amount of excess capacity at low unemployment rates.
• E) as prices rise, unemployment also rises.

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Definitions:

Density of Water

The mass per unit volume of water, approximately 1 gram per cubic centimeter (1 g/cm³) at standard temperature and pressure.

Ice Melting

The physical process by which ice transitions to liquid water as it absorbs heat from its surroundings, typically occurring at 0 degrees Celsius under standard atmospheric pressure.

Density

The mass per unit volume of a substance, often used as an identifying property of various materials.

Mass

A measure of the amount of matter that an object contains; also a fundamental property of an object that determines its inertia and gravitational interaction.