Which of the Following Does NOT Occur as the Economy

question 70

Multiple Choice

Which of the following does NOT occur as the economy moves from an expansion to a recession?

• A) Incomes fall during recessions as firms cut production in response to unplanned increases in inventories.
• B) The multiplier process reinforces any decrease in spending and pushes the economy into recession.
• C) The change in planned spending exceeds the change in real GDP.
• D) An initial decrease in autonomous spending is the trigger that creates the business cycle turning point.

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Definitions:

MC

Marginal Cost, which is the increase in total cost that arises from producing one additional unit of a good or service.

Price-Discriminates

Price discrimination involves selling the same product or service at different prices to different customers, based on factors like demand, cost of serving, or market segmentation.

Producer Surplus

The difference between what producers are willing and able to supply a good for and the actual price they receive, measuring the benefit to producers from market transactions.

Deadweight Loss

The decline in economic productivity due to the failure to achieve or the impossibility of achieving equilibrium for a specific good or service.