When Aggregate Demand Declines Unexpectedly and Wage Contracts Are Fixed

question 86

Multiple Choice

When aggregate demand declines unexpectedly and wage contracts are fixed, then the average price level will:

• A)increase and business firms will hire new workers.
• B)decline and firms will reduce wages.
• C)decline and business firms will lay off workers.
• D)increase and business firms will lay off workers.
• E)increase and business firms will increase wages.

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