When Aggregate Demand Declines, Many Firms May Reduce Employment Rather

question 51

Multiple Choice

When aggregate demand declines, many firms may reduce employment rather than wages because wage reductions may

• A)reduce per-unit production costs.
• B)reduce worker morale and work effort and thus lower productivity.
• C)increase the firms' cost of raising financial capital.
• D)reduce the demands for their products.

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Definitions:

Adjusted Trial Balance

A list of all accounts and their balances after adjusting entries are made, used to prepare financial statements.

Long-term Liabilities

Financial obligations of a company due after more than one year, such as bonds payable, long-term loans, and lease obligations.

Bonds Payable

These are long-term debt securities issued by companies to borrow money, with an obligation to pay interest and repay the principal at a future date.

Notes Payable Account

A notes payable account is a liability account on a company's balance sheet representing amounts the company owes under written promissory notes.