During an Expansion,how Do Inflation and Unemployment Typically Change

question 81

Multiple Choice

During an expansion,how do inflation and unemployment typically change?

• A)Inflation and unemployment both rise.
• B)Inflation and unemployment both fall.
• C)Inflation falls and unemployment rises.
• D)Inflation rises and unemployment falls.

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Definitions:

Equilibrium GDP

The level of Gross Domestic Product where the aggregate supply equals aggregate demand within an economy, leading to a stable economic condition.

Full Employment GDP

The level of GDP produced when the economy is utilizing all available resources, including labor, at the maximum sustainable rate without causing inflation.

Recessionary Gap

A situation where the real Gross Domestic Product (GDP) is lower than the potential GDP, indicating underutilization of resources.

Multiplier

In economics, a factor by which an initial change in spending leads to a greater change in income and overall economic activity.