In the Short Run, Which of the Following Is Not

question 122

Multiple Choice

In the short run, which of the following is not correct?

• A)Increasing the money supply increases the demand for goods and services.
• B)Increasing the money supply encourages firms to hire more workers.
• C)Lowering the money supply leads to a higher level of unemployment.
• D)Policies that encourage higher employment will also induce a lower rate of inflation.

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Definitions:

Profit-Maximizing Wage

The wage level at which a firm maximizes its profits by balancing the cost of labor with productivity.

Labor Supply Data

Information and statistics about the workforce available for employment in an economy, including numbers, demographics, and skills.

Nominal Wages

Are the wages paid to workers measured in current monetary terms, without adjustment for inflation.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, often used to measure inflation.