Suppose the price level falls but because of fixed nominal wage contracts the real wage rises and firms cut back on production This is a demonstration of the ?

Related Mcqs:

Which of the following statements about economic fluctuations is true ?

A. None of these answers B. A depression is a mild recession C. A variety of spending income, and output measures can be used to measure economic fluctuation because most macroeconomic quantitties tend to fluctuate together D. A recession is when output rises above the natural rate of output...

According to the interest rate effect aggregate demand slopes downward (negatively) because ?

A. lower prices increase money holdings decrease lending interest rates rise, and investment spending falls B. lower prices increase the value of money holding and consumer spending increases C. lower prices decrease the value of money holdings and consumers spending decreases D. lower prices reduce money holdings increase lending interest rates fall, and investment spending … According to the interest rate effect aggregate demand slopes downward (negatively) because ?Read More...

Suppose the economy is initially in long-run equilibrium Then suppose there is an increase in military spending due to rising international tensions According to the model of aggregate demand and aggregate supply what happens to prices and output in the short run ?

A. Price fall; output rises B. Price fall; output falls C. Price rise; output fall D. Price rise; output rise...

Stagflation occurs when the economy experiences ?

A. rising prices and rising output B. rising prices and falling output C. falling prices and falling output D. falling prices and rising output...

Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers wished to move output to its long run natural rate they should attempt to ?

A. Shift aggregate demand to the left B. Shift short run aggregate supply to the left C. shift aggregate demand to the right D. shift short-run aggregate supply to the right...