Unemployment Tends to Go Up When Aggregate Demand Falls Mainly

question 32

Multiple Choice

Unemployment tends to go up when aggregate demand falls mainly because

• A) when wages fall, workers seek alternative employment.
• B) unions renegotiate for lower wages, making it difficult for job searchers to find suitable jobs.
• C) wage rates tend to be downward rigid.
• D) most human capital is general and not firm-specific.

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Definitions:

Shares

Shares represent an ownership stake in a company or financial asset, distributing profits equally through dividends if any are declared.

Earnings Per Share

A measure of a company's profitability calculated as net income divided by the number of outstanding shares of its common stock.

Treasury Shares

Shares of a company's own stock that it has repurchased and are held in the company's treasury.

Treasury Stock

Stocks that a company originally issued and then bought back, which decreases the number of shares available for trade in the market.