When aggregate demand declines, wage rates may be inflexible downward, at least for a time, because of:
A. the foreign purchases effect.
B. inflexible product prices.
C. wage contracts.
D. the wealth effect.
C. wage contracts.
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Firms need to know the shape of a demand curve to use marginal analysis.
Answer the following statement true (T) or false (F)
Monopolistically competitive firms
a. are guaranteed to earn short-run economic profit b. may earn short-run economic profits, although long-run economic profit is typically zero c. may earn economic profit both in the short run and in the long run d. earn zero economic profit both in the short run and in the long run e. can only earn an economic profit in the inelastic portion of their demand curves
Every Friday night Elizabeth either goes bowling or goes to the movies. Because the price of bowling went up, Elizabeth now sees more movies. Elizabeth's behavior would be best described as a change in which determinant of demand?
a. Price of complementary goods b. Expectations c. Income d. Number of buyers e. Price of substitute goods
The expenditure multiplier applies only to changes in government spending
a. True b. False Indicate whether the statement is true or false