The economy is in long-run equilibrium. Suddenly, due to corporate scandals, international tensions, and the loss of confidence among policymakers, citizens become pessimistic conceming the future. They maintain this level of pessimism for a long time. Refer to the Scenario 14-2. Which of the following are consistent with the aggregate demand and aggregate supply theory? Select one a. The expected price level falls. Bargains are struck for lower increases in wages. b. The expected price level falls. Bargains are struck for higher increases in wages. c. The expected price level rises. Bargains are struck for lower increases in wages. d. The expected price level rises. Bargains are struck for higher increases in wages.

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Unemployment and Cost of Unemployment

Unemployment is the state of being unemployed, even when an individual is actively seeking work opportunities. The unemployment rate refers to the percentage of the workforce that is currently unemployed.