Which Statement(s)is (Are)consistent with a Positive Relationship Between Inflation and the Output

question 60

Multiple Choice

Which statement(s) is (are) consistent with a positive relationship between inflation and the output gap?

• A)If output rises above its potential level,the unemployment rate falls and firms will raise wages and prices more rapidly.
• B)In the short run,the AS curve is upward sloping.
• C)Through Okun's law,the negative relationship between the output and unemployment gaps allows the modern Phillips curve to be translated into the AS curve.
• D)all of the above
• E)none of the above

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Definitions:

Substitute Resources

Alternative products or services that can replace each other in use, offering consumers choices and influencing supply and demand dynamics in markets.

Employment of Land

The use of land resources for productive or economic activities, including farming, building, or conservation efforts.

Substitution Effect

The economic principle that as the price of one good increases, consumers will replace it with a cheaper alternative, assuming the utility derived remains unchanged.

Output Effect

The effect that changes in the price level have on the quantity of goods and services supplied, due to the real balances of money.