If a Contractionary Gap Is Cured by Increasing Aggregate Demand

question 15

Multiple Choice

If a contractionary gap is cured by increasing aggregate demand,

• A)both c and e are correct
• B)both d and e are correct
• C)real wages fall because prices rise
• D)prices rise causing real wages to increase
• E)money wages decrease as prices decrease

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Definitions:

Investment Balance

The total value of all securities, such as stocks, bonds, and other investments, an individual or entity owns.

Cash Dividends

Earnings paid out to shareholders by a corporation, typically as a profit distribution.

Equity Method

An accounting technique used to record investments in other companies, recognizing the investor’s share of investee profits and losses.

Long-Term Investment

Investments held for an extended period, typically exceeding one year, with the intention of generating higher returns.