If Labor Costs Rise at the Same Time That the Federal

question 5

Multiple Choice

If labor costs rise at the same time that the federal government decreases its purchases,in the short run

• A) aggregate output and the price level will both increase.
• B) aggregate output will increase, but the price level will fall.
• C) aggregate output and the price level will both fall.
• D) aggregate output will fall, but the price level may either increase or decrease.

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Definitions:

Interstate Commerce

Trade, traffic, or transportation involving the crossing of state lines, regulated by the federal government.

Contracts

Agreements that create legally enforceable obligations between parties, typically involving the exchange of goods, services, money, or promises.

Offeree

The person to whom an offer is made, especially in the context of contracts.

Offer Made

In contract law, a proposal by one party to another intended to create a legally binding agreement upon acceptance.