Question 1
If, when recovering from an inflationary period, the inflation rate declines and the unemployment rate also declines, this could be the result of
◦ aggregate supply increasing at a faster rate than aggregate demand is decreasing.
◦ aggregate supply increasing at a slower rate than aggregate demand is decreasing.
◦ aggregate supply decreasing at a faster rate than aggregate demand is decreasing.
◦ aggregate supply decreasing at a faster rate than aggregate demand is increasing.
Question 2
As the unemployment rate declines in response to the economy moving closer and closer to capacity output, the aggregate price level rises at a decreasing rate.
◦ true
◦ false