People Had Been Expecting the Price Level to Be 140

question 60

Multiple Choice

People had been expecting the price level to be 140 but it turns out to be 138.Johnson Family Restaurants increases the number of workers it employs.What could explain this?

• A)both sticky price theory and sticky wage theory
• B)sticky price theory but not sticky wage theory
• C)sticky wage theory but not sticky price theory
• D)neither sticky wage theory nor sticky price theory

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Definitions:

Compromise Dividend Policy

An approach to dividend disbursement that attempts to balance the interests of shareholders preferring regular dividends with those favoring reinvestment of profits.

Positive Net Present Value

Indicates that the present value of future cash flows from an investment exceeds the initial investment cost, suggesting profitability.

Debt-Equity Ratio

A measure of a company's financial leverage, calculated by dividing its total liabilities by its shareholder equity.

Stock Repurchase

A company's buying back of its own shares from the marketplace, reducing the number of outstanding shares and often increasing shareholder value.