Rigidities That Diminish Wage and Price Flexibility Such as Long-Term

question 11

Multiple Choice

Rigidities that diminish wage and price flexibility such as long-term contracts suggest that an increase in the expected price level

• A)might not translate into complete adjustment of wages and prices.
• B)might cause aggregate demand to decrease.
• C)might cause aggregate supply to increase.
• D)will have no effect on the short-run aggregate supply curve.

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Definitions:

Manufacturer

An entity that makes goods through a process involving raw materials, components, or assemblies, usually on a large scale.

Future Market Value

An estimation of what an asset or investment will be worth in the future, based on expected growth rates or market trends.

Difficult To Predict

A term indicating uncertainty in forecasting future events or outcomes due to complex variables and lack of clear precedent.

Right To Cancel

The legal entitlement allowing a consumer to annul a contract or agreement within a specified timeframe, often without penalty.