Suppose Workers Notice a Fall in Their Nominal Wage but Are

question 16

Multiple Choice

Suppose workers notice a fall in their nominal wage but are slow to notice that the price of things they consume have fallen by the same percentage. They may infer that the reward to working is temporarily

• A)low and so supply a smaller quantity of labor.
• B)low and so supply a larger quantity of labor.
• C)high and so supply a smaller quantity of labor.
• D)high and so supply a larger quantity of labor.

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Definitions:

Adjusting Entries

Entries made in journal accounts to correct any discrepancies and ensure that the revenue and expense recognition principles are followed accurately.

Relevant Financial Information

Financial data that is capable of making a difference in business decisions, being timely and having predictive and confirmatory value.

Cash Basis

Cash basis is an accounting method where revenues and expenses are recorded only when cash is received or paid, regardless of when the transactions occurred.

Accounting Period

A specific time period at the end of which an entity prepares financial statements to assess its financial performance and position.