Which of the Following Claims Is Consistent with the Views

question 18

Multiple Choice

Which of the following claims is consistent with the views of mainstream economists?

• A)If we increase the rate of inflation from 3 percent to 6 percent,then the rate of unemployment will temporarily fall.
• B)If we increase the rate of inflation from 3 percent to 6 percent,then the rate of unemployment will temporarily rise.
• C)If we increase the rate of inflation from 3 percent to 6 percent,then the rate of unemployment will permanently fall.
• D)If we increase the rate of inflation from 3 percent to 6 percent,then the rate of unemployment will permanently rise.

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Definitions:

Consumer Surplus

The divergence between the full amount consumers intend and are able to allocate for a good or service, and the amount they really pay.

Total Utility

The complete fulfillment derived from the consumption of a specific amount of products or services.

Consumer Surplus

The gap between the total price consumers are willing and able to shell out for a good or service and the amount they really pay.

Water-Diamond Paradox

An economic paradox that questions why diamonds are pricier than water despite water being essential for survival and diamonds having relatively little practical use.