When Stock Prices Declined During the Great Recession,it Caused Aggregate

question 123

Multiple Choice

When stock prices declined during the Great Recession,it caused aggregate demand to decrease because

• A) households became more optimistic and increased consumer spending.
• B) the government raised taxes and decreased spending.
• C) firms' net worth decreased,leading to an increase in investment spending.
• D) household wealth decreased,leading to a decline in consumer spending.
• E) the government refused to allow the money supply to increase.

---

Definitions:

Monopolistically Competitive Firm

A company operating in a monopolistically competitive market, distinguishing itself through product differentiation and facing a downward sloping demand curve.

MC Curves

Marginal Cost Curves, which graphically represent the change in the cost of producing one more unit of a good.

ATC Curves

Stands for Average Total Cost curves, which represent the average total cost per unit of output at different levels of production in economics.

Efficient Scale

The level of production that minimizes average total cost, thereby optimizing the production process and resource utilization.