Pessimism Suppose the Economy Is in Long-Run Equilibrium. Then Because of of Corporate

question 46

Multiple Choice

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.


-Refer to Optimism.What happens to the expected price level and what's the result for wage bargaining?

• A)The expected price level falls.Bargains are struck for higher wages.
• B)The expected price level falls.Bargains are struck for lower wages.
• C)The expected price level rises.Bargains are struck for higher wages.
• D)The expected price level rises.Bargains are struck for lower wages.

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Definitions:

Retained Earnings

The accumulated portion of net income not distributed to shareholders and reinvested in the business.

Voting Rights

The rights of shareholders to vote on key corporate decisions, such as the election of the board of directors.

Preemptive Rights

The rights that give existing shareholders the opportunity to buy additional shares of a company's new stock issue before the public, maintaining their percentage of ownership.

Retained Earnings

The portion of net income that is retained by the corporation rather than distributed to its owners as dividends, typically used for reinvestment in the business or paying down debt.