The Phillips curve illustrates the
A. Inverse relationship between the price level and the level of output.
B. Direct relationship between the unemployment rate and the inflation rate.
C. Inverse relationship between the unemployment rate and the inflation rate.
D. Direct relationship between the price level and the level of output.
Answer: C
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Marginal cost eventually increases because
A) of the law of diminishing returns. B) eventually each additional worker produces a successively smaller addition to output. C) the marginal product of the variable input eventually falls. D) All of the above answers are correct.
Inflation can be caused either by rapid growth rate of aggregate demand or by sluggish growth of aggregate supply.
Answer the following statement true (T) or false (F)