Figure 12-2 -If an Unanticipated Increase in Demand in Figure 12-2 Shifts

question 54

Multiple Choice

Figure 12-2

-If an unanticipated increase in demand in Figure 12-2 shifts the demand for accountants from D₁ to D₂,how will the higher level of demand influence the wages of accountants in the short run and the long run?

• A)In the short run,wages will increase to W₂,but the wage increase will be smaller in the long run.
• B)In the short run,wages will be less than W₂,but in the long run,they will rise to W₂.
• C)In the short run,wages will increase to W₂,and in the long run,they will be even higher than W₂.
• D)Employment will increase,but the higher level of demand will not alter the wages of accountants.

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Definitions:

Desired Rate of Return

The minimum percentage of gain or profit expected by an investor from an investment.

Compound Interest

Interest earning mechanism in which the calculation includes interest on the original principal and on all previously earned interest of a loan or deposit.

Present Value

Present Value is the current worth of a future sum of money or stream of cash flows given a specified rate of return.

Earnings Rate

The return on an investment or project expressed as a percentage of the cost, often used to measure profitability.