Scenario 14-1

question 138

Multiple Choice

Scenario 14-1. The economy is in long-run equilibrium. Suddenly, due to improved international relations and the increased confidence of policymakers, citizens become more optimistic about the future and stay this way for a long time.
-Refer to Scenario 14-1. Which of the following are predicted by the aggregate demand and aggregate supply theory?

• A)The expected inflation falls. Workers bargain for higher increases in wages.
• B)The expected inflation falls. Workers bargain for lower increases in wages.
• C)The expected inflation rises. Workers bargain for higher increases in wages.
• D)The expected inflation rises. Workers bargain for lower increases in wages.

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Definitions:

Agreement

A mutual understanding or arrangement between two or more parties about their relative rights and responsibilities.

Good Faith Purchaser

An individual who buys property without knowledge of any existing claims or defects against it.

Authority

The power or right to give orders, make decisions, and enforce obedience, typically vested in leaders and institutions.

Protection

Measures or actions taken to safeguard against harm or damage, often in the context of legal rights, intellectual property, or personal safety.