a. people respond to incentives. b. rational people think at the margin. c. people face tradeoffs. d. improvements in efficiency sometimes come at the expense of equality. QUESTION 8 In which of the following situations unemployment rate may decrease a. When inflation rate increases in the short-run b. When inflation rate decreases in the short-run c. When inflation rate stays constant in the long-run d. When inflation rate stays constant in the short-run QUESTION 9 One important reason for an increase in the inflation rate is a. a decrease in the interest rate by Federal Reserve b. a decrease in the government expenditure c. an increase in the money supply in the economy d. a decrease in the money supply in the economy QUESTION 10 People often have to face the situation of trade-off due to a. incomes fluctuate with business cycles. b. people, by nature, tend to disagree. c. goods and services not being scarce. d. resources being scarce