When Unemployment Is Below Its Natural Rate, the Inflation Rate

question 1

Multiple Choice

When unemployment is below its natural rate, the inflation rate will eventually

• A)increase.
• B)decrease.
• C)move to its natural rate.
• D)become equal to the natural rate of unemployment.
• E)fall to meet expected inflation.

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Definitions:

Cost Minimisation

A business strategy aimed at reducing expenses to improve profitability without compromising on the quality of the products or services offered.

Predetermined Manufacturing Overhead Rates

Rates used to allocate manufacturing overhead costs to products, calculated before the actual costs or activity levels are known.

Direct Labour Hours

Direct labour hours refer to the amount of time spent by workers directly involved in the manufacturing process of a product or service.

Cost Driver

A factor that causes or relates to a change in the cost of an activity or product.