If the Actual Price Level Turns Out to Be Lower

question 49

Multiple Choice

If the actual price level turns out to be lower than expected,

• A)resource suppliers lose because they receive lower real incomes
• B)potential output rises
• C)potential output falls
• D)firms earn greater profits because their costs decrease
• E)the unemployment rate will probably rise

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Definitions:

Bought Deals

An arrangement in which an investment bank buys an entire new issue of securities from a company and resells it to investors.

Underwriters

Entities or individuals that evaluate and assume the risk associated with financial transactions, often seen in insurance and investment banking.

Treasury Stock

Shares that were once part of the outstanding shares and have been bought back by the issuing company, reducing the amount of outstanding stock on the market.

Yield to Maturity

The total return anticipated on a bond if the bond is held until it matures. YTM is considered a long-term bond yield expressed as an annual rate.