During an Economic Downturn, Households Respond to a Decline in Income

question 139

Multiple Choice

During an economic downturn, households respond to a decline in income by

• A) reducing taxes.
• B) reducing consumption.
• C) increasing the quantity of labor supplied.
• D) negotiating higher wages.

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Definitions:

Operating Activities

Transactions and other events that affect the net income of a company, involving the primary revenue-generating activities such as sales and expense payments.

Cash Dividend

A payment made by a company out of its profits to its shareholders, usually in cash.

Net Cash

The amount of cash available after all cash inflows and outflows have been accounted for, including both operating activities and investments.

Financing Activities

Transactions related to a company's raising or repaying capital, such as issuing shares, paying dividends, or taking on new loans.