The Figure Given Below Depicts the Long Run Equilibrium in an Economy

question 68

Multiple Choice

The figure given below depicts the long run equilibrium in an economy. Figure 14.1 In the figure:
AD₁ and AD₂: Aggregate demand curves
AS₁ and AS₂: Aggregate supply curves
Refer to Figure 14.1.When the economy moves from point B to point C:

• A)both the unemployment rate and the rate of inflation increases.
• B)both the unemployment rate and the rate of inflation declines.
• C)the unemployment rate declines at the cost of higher inflation.
• D)the rate of inflation declines at the cost of a higher unemployment rate.
• E)the rate of inflation declines with no change in the unemployment rate.

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Definitions:

Molasses

A thick, dark syrup that is a byproduct of sugar refining, used in baking, as a sweetener, or in the fermentation of alcohol.

Constrained Machine

A piece of equipment within a manufacturing process that limits the total output due to its capacity or throughput level.

Constrained Resource

A limiting factor or scarce resource that restricts the output or productivity of a manufacturing or business process.

Profitable Product

A product that generates revenue exceeding its costs of production and distribution, leading to a profit.