If Everyone in the Economy Correctly Anticipates the Inflation Rate

question 130

Multiple Choice

If everyone in the economy correctly anticipates the inflation rate, the unemployment rate

• A)will be the natural rate of unemployment.
• B)will be the cyclical rate of unemployment.
• C)will be inversely related to the expected inflation rate.
• D)will be positively related to the expected inflation rate.

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Definitions:

Note Payable

A promissory note from the maker’s point of view.

Interest Accrued

The accumulation of interest on a loan or bond that has been earned but not yet paid.

Periodic Inventory Method

An inventory accounting method where physical counts are used to determine the cost of goods sold and ending inventory at specific intervals.

Petty Cash

A small amount of cash on hand used for covering minor expenses in an organization.