In the Long Run, the Inflation Rate

question 161

Multiple Choice

In the long run, the inflation rate

• A) is equal to the natural inflation rate.
• B) is zero.
• C) can take on any value.
• D) must be equal to the natural unemployment rate.
• E) cannot be negative.

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Definitions:

Held Up

Delayed or stopped by something or someone, causing a pause in progress or movement.

Average Variable Costs

The total variable costs (costs that change with output level) divided by the quantity of output produced.

Average Costs

The total cost of production divided by the number of goods produced, a measure of cost efficiency.

Shutting-Down

A short-term decision by a firm to cease operations while it still has the option to resume in the future, often due to unfavorable market conditions.