With the Self-Correcting Mechanism,if a Negative Demand Shock Occurs

question 155

Multiple Choice

With the self-correcting mechanism,if a negative demand shock occurs,

• A) a decrease in wage rates will lead to a decrease in the price level so that the economy returns to full employment
• B) the price level will increase,causing equilibrium GDP to return to its original level
• C) the wage rate will eventually increase,restoring GDP to its full-employment level
• D) the price level will remain constant
• E) there will be no effect in the long run

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Definitions:

Job-Order Costing

A cost accounting system that assigns manufacturing costs to an individual product or batch of products, typically used when the products being produced are sufficiently different from each other.

Work in Process Inventory

The total value of all partially completed goods or work that is not yet finished within a production process.

Operations

Activities involved in the day-to-day running of a business for the purpose of producing value for the stakeholders.

Raw Materials

The basic materials and components used at the start of the production process, essential for creating the finished product.