If the Natural Rate of Unemployment Falls

question 133

Multiple Choice

If the natural rate of unemployment falls,

• A)both the short-run Phillips curve and the long-run Phillips curve shift.
• B)only the short-run Phillips curve shifts.
• C)only the long-run Phillips curve shifts.
• D)neither the short-run nor the long-run Phillips curves shift.

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Definitions:

Fixed Costs

Costs that do not vary with the level of production or sales over a short period, such as rent, salaries, and insurance premiums.

Variable Costs

Costs that change in direct proportion to changes in the level of production or sales activity, such as raw materials and labor.

Full Cost Pricing

A pricing strategy where the price of a product is determined by adding a markup to its total production costs, including both direct and indirect costs.

Cost-Plus Pricing

A pricing strategy where the selling price is determined by adding a specific markup to a product's cost price.