When Aggregate Demand Declines Unexpectedly and Wage Contracts Are Fixed

question 10

Multiple Choice

When aggregate demand declines unexpectedly and wage contracts are fixed, then inflation will

• A) increase and business firms will hire new workers.
• B) decline and firms will reduce wages.
• C) decline and business firms will lay off workers.
• D) increase and business firms will lay off workers.
• E) increase and business firms will increase wages.

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Definitions:

Infant Mortality

Infant mortality is the death of young children under the age of 1, measured as the number of deaths per 1,000 live births in a given year.

Full-Term Infants

Babies born after completing the standard 37 to 40 weeks of gestation, considered to have reached optimal prenatal development.

Preterm Infants

Neonates born prematurely, often requiring specialized care due to their undeveloped organs and bodily systems.

Cognitive Deficits

Shortcomings or impairments in cognitive functions such as memory, attention, problem-solving, and decision-making.