Keynesians Contend That Stabilization Policy Can Offset the Output and Unemployment

question 72

Multiple Choice

Keynesians contend that stabilization policy can offset the output and unemployment effect of unanticipated inflation because

• A)nominal wage and price stickiness prevent prices and inflation from adjusting quickly and as a result unemployment sustains.
• B)price and inflation expectations do not adjust quickly as claimed by classical economists.
• C)nominal wage and price adjust quickly and as a result cyclical unemployment remains zero.
• D)price and inflation expectations adjust quickly and employment rises.

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Definitions:

Direct Labor Hours

The total hours worked directly on the production of goods and services, often used in calculating labor costs.

Sales Salary Expense

The cost associated with compensating employees involved in the sales process, typically classified as a selling expense.

Overhead Application Rate

A rate used to allocate overhead costs to products or services, based on a specific formula or activity base.

Work In Process Inventory

Goods in various stages of production within a factory, not yet completed.