Pessimism Suppose the Economy Is in Long-Run Equilibrium. Then Because of of Corporate

question 46

Multiple Choice

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.


-Refer to Optimism.What happens to the expected price level and what's the result for wage bargaining?

• A)The expected price level falls.Bargains are struck for higher wages.
• B)The expected price level falls.Bargains are struck for lower wages.
• C)The expected price level rises.Bargains are struck for higher wages.
• D)The expected price level rises.Bargains are struck for lower wages.

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