Unanticipated Deflation Can Create Unemployment If

question 31

Multiple Choice

Unanticipated deflation can create unemployment if

• A)nominal wages are sticky, causing real wages to rise over time.
• B)nominal wages are flexible, causing people's real incomes to decline.
• C)banks refuse to make loans at low nominal interest rates.
• D)nominal interest rates remain positive.

---

Definitions:

Hearing Acuity

The sharpness or clarity of hearing, often tested to determine the faintest tones a person can hear at various frequencies.

Mechanical Reasoning

The ability to understand and apply mechanical concepts and principles to solve problems.

High Reliability

A term used to describe organizations or systems with processes and structures in place that make them exceptionally consistent in accomplishing their goals and avoiding potentially catastrophic errors.

Predictive Validity

The degree to which a measurement or test score can forecast future success in a related activity or result.