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.

Understand basic statistical computations such as average, standard deviation, and range for given data sets.

Understand the selection of appropriate measures of central tendency in various contexts.

Understand the principles behind sample and population characteristics, including parameters and statistics.

Understand the calculation and interpretation of variance and its relevance to data scatter.

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Definitions:

Interest Days

The total number of days over which interest is calculated on a loan or investment.

Interest-Bearing Note

A note that has a maturity value greater than its face value.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window.

Cash Discounts

Reductions in price offered to customers for prompt payment of their bills.