As output increases after a recession, which one of the following statements best describes what happens to prices?
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a. As output increases, prices at first remain stable. As some resources begin to be fully employed, prices increase. But when the economy reaches full employment, only prices increase.
b. As output increases, prices at first remain stable. As some resources begin to be fully employed, prices increase. But when the economy reaches full employment, prices become stable again.
c. As output increases, prices at first remain stable; but at some point, they begin to rise proportionately.
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