If the Price Level Remains Constant but the Wage Rate

question 134

Multiple Choice

If the price level remains constant but the wage rate increases,then there will be __________ in production and the SRAS curve will shift __________.

• A) an increase; rightward
• B) a decrease; rightward
• C) an increase; leftward
• D) a decrease; leftward

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Definitions:

Economic Value Added

A measure of a company's financial performance based on the residual wealth calculated by deducting its cost of capital from its operating profit, adjusted for taxes on a cash basis.

Gordon Model

A mathematical model for valuing stock based on an assumed constant growth rate into the indefinite future.

Cost Of Retained Earnings

The opportunity cost for shareholders of having a company retain and reinvest earnings rather than distributing them as dividends, often approximated by the expected return on equity.

Dividend

A portion of a company's earnings that is paid to shareholders, typically on a quarterly basis, as decided by the board of directors.