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In the Graphs Below, QP Refers to the Economy's Potential

Question 1

Multiple Choice

In the graphs below, QP refers to the economy's potential output level. In the graphs below, Q<sub>P</sub> refers to the economy's potential output level.   Refer to the graphs above. In Graph A, an increase in the price level from P<sub>1</sub> to P<sub>2</sub> will cause: A)  The nation's unemployment rate to be greater than the natural rate of unemployment B)  The nation's unemployment rate to be less than the natural rate of unemployment C)  Product prices to decrease D)  Profits to decrease Refer to the graphs above. In Graph A, an increase in the price level from P1 to P2 will cause:


A) The nation's unemployment rate to be greater than the natural rate of unemployment
B) The nation's unemployment rate to be less than the natural rate of unemployment
C) Product prices to decrease
D) Profits to decrease

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