If an Increase in Inflation Permanently Reduced Unemployment, Then

question 49

Multiple Choice

If an increase in inflation permanently reduced unemployment, then

• A)money would not be neutral and the long-run Phillips curve would slope upward.
• B)money would not be neutral and the long-run Phillips curve would slope downward.
• C)money would be neutral and the long-run Phillips curve would slope upward.
• D)money would be neutral and the long-run Phillips curve would slope downward.

Identify the impact of price changes on complementary and substitute goods.

Distinguish between normal and inferior goods and their responses to income changes.

Recognize factors that cause shifts in demand and supply curves.

Understand the law of supply and how price influences quantity supplied.

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Definitions:

Capital Cost

The upfront expenditure required to acquire or improve fixed assets such as buildings, machinery, or equipment, contributing to the productive capacity of a firm.

Hurdle Rate

The minimum rate of return on an investment that a business requires before it will proceed with the project.

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital where each category of capital is proportionately weighted.

Fixed Order Interval

A replenishment method where orders are placed at fixed intervals, ensuring a periodic review and stock refill.