All Points on the SP Curve (But Not on the LP

question 123

Multiple Choice

All points on the SP curve (but not on the LP line) share the characteristic that the economy is not in the long-run equilibrium because

• A)price level is constantly increasing faster than nominal wage rate.
• B)wage contracts failed to anticipate inflation correctly.
• C)wage contracts failed to specify in advance the wage increases necessary to keep up with inflation.
• D)All of the above.

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Definitions:

Journal

A book or digital record where financial transactions are initially recorded in chronological order.

Ledger Accounts

Records that summarize all the transactions related to a particular aspect of a business's finances, such as assets, liabilities, equity, revenue, and expenses.

Unearned Revenues

Income received by a company for goods or services yet to be delivered or performed, considered a liability until earned.

Revenues

The total income generated by a company from its normal business operations, before any expenses are subtracted.