Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.
-Refer to Financial Crisis.If nominal wages are sticky,which of the following helps explains the change in output?
A) real wages fall,so firms choose to produce less
B) real wages fall,so firms choose to produce more
C) real wages rise,so firms choose to produce less
D) real wages rise,so firms choose to produce more
Correct Answer:
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