If Prices and Wages Are Sticky, a Decrease in Aggregate

question 61

Multiple Choice

If prices and wages are sticky, a decrease in aggregate demand will cause

• A) an increase in the price level and employment.
• B) a decrease in the price level and employment.
• C) an increase in the price level and a decrease in employment.
• D) a decrease in the price level and an increase in employment.

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Definitions:

Just Noticeable Difference (JND)

The smallest difference in stimulation that a person can detect 50% of the time; a measure of sensory sensitivity.

Just Noticeable Difference

The smallest difference in stimulus intensity that a specific sense can detect.

Proportional Difference

The comparison between two quantities or measurements in terms of their ratio or relative size.

Perceivable Difference

The smallest difference in stimulation that a person can detect 50% of the time.