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Unemployment Tends to Go Up When Aggregate Demand Falls Mainly

Question 32

Multiple Choice

Unemployment tends to go up when aggregate demand falls mainly because


A) when wages fall, workers seek alternative employment.
B) unions renegotiate for lower wages, making it difficult for job searchers to find suitable jobs.
C) wage rates tend to be downward rigid.
D) most human capital is general and not firm-specific.

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