Scenario 14-2

question 30

Multiple Choice

Scenario 14-2. The economy is in long-run equilibrium. Suddenly, due to corporate scandals, international tensions, and the loss of confidence among policymakers, citizens become pessimistic concerning the future. They maintain this level of pessimism for a long time.
-Refer to Scenario 14-2. Which of the following are consistent with the aggregate demand and aggregate supply theory?

• A)The expected price level rises. Bargains are struck for higher increases in wages.
• B)The expected price level rises. Bargains are struck for lower increases in wages.
• C)The expected price level falls. Bargains are struck for higher increases in wages.
• D)The expected price level falls. Bargains are struck for lower increases in wages.

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Definitions:

Incoming Cash

Money received by an organization, representing inflows from various sources like sales, investments, or loans.

Assets

Economic resources or valuable items owned by an individual or business, expected to generate positive economic value.

Expenses

Outflows or other uses of assets or incurring of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major operations.

Earning Revenue

The process of generating income from business activities over a period, typically from the sale of goods and services.