If the general level of prices is lower than business decision makers anticipated when they entered into long-term contracts for raw materials and other resources, which of the following is most likely to occur?
A) An economic boom.
B) Highly attractive profit margins.
C) An actual rate of unemployment that is greater than the natural rate of unemployment
D) A sharp increase in imports.

Question

Quizplus · Accepted Answer

When prices are lower than expected, businesses may face reduced revenues, leading to cost-cutting measures such as layoffs, which can increase unemployment above the natural rate.

If the General Level of Prices Is Lower Than Business