Assume That Expectations of the Price Level and Productivity Are

question 21

Multiple Choice

Assume that expectations of the price level and productivity are accurate. Now suppose that the economy experiences an increase in productivity. Which of the following will occur in the medium run?

• A) A decrease in unemployment.
• B) An increase in unemployment.
• C) An increase in employment.
• D) No change in unemployment.
• E) A decrease in employment.

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Definitions:

Raw Material

Basic materials and substances used in the initial stages of production to create goods and services.

Raw Materials

Basic materials that are processed and used in the manufacturing of goods or products.

Work in Process

A stage in the manufacturing process where the product is partially completed but not yet ready for sale.

Direct Materials

These are the raw materials that can be directly traced to the production of a product.