When Aggregate Demand Declines Unexpectedly and Wage Contracts Are Fixed

question 86

Multiple Choice

When aggregate demand declines unexpectedly and wage contracts are fixed, then the average price level will:

• A)increase and business firms will hire new workers.
• B)decline and firms will reduce wages.
• C)decline and business firms will lay off workers.
• D)increase and business firms will lay off workers.
• E)increase and business firms will increase wages.

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Definitions:

Extended Family

A family that extends beyond the immediate family, including grandparents, aunts, uncles, and other relatives.

Friendships

Social bonds between individuals based on mutual affection, trust, and support, often providing a source of happiness and well-being.

Age

The length of time that a person or thing has existed; often measured in years and used to indicate maturity or lifespan stages.

Generativity

A concern for establishing and guiding the next generation, often expressed through parenting, teaching, or mentorship.