When Aggregate Demand Declines, Some Firms May Reduce Employment Rather

question 43

Multiple Choice

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

• A)not be possible due to the minimum wage law.
• B)increase the cost of raising money capital.
• C)reduce the demands for their products.
• D)set off a price war.

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Definitions:

Inventory Cost Formula

A method used to determine the cost of an inventory item, including methods such as First-In, First-Out (FIFO), Last-In, First-Out (LIFO), and average cost.

Management

The process of planning, organizing, leading, and controlling an organization's resources to achieve specific goals.

FIFO

"First In, First Out," an inventory valuation method where the oldest inventory items are recorded as sold first.

Perpetual Inventory System

A method of accounting for inventory that records sales and purchases of inventory instantly through the use of computerized point-of-sale systems and enterprise asset management software.