When a Firm Allows Others to Use an Entire Business

question 21

Multiple Choice

When a firm allows others to use an entire business system in exchange for compensation, the arrangement is known as ________.

• A) industrial design rights
• B) franchising
• C) joint venture
• D) equity venture

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Definitions:

Aggregate Demand

The total demand for all goods and services within an economy at various price levels, in a given time period.

Automatic Stabilizer

Economic policies and programs, such as unemployment benefits and taxation, that automatically adjust to counteract economic fluctuations without direct intervention by policymakers.

Crowding-out

A situation where increased public sector spending leads to a reduction in private sector spending.

Accelerator Effect

Refers to the phenomenon where an increase in national income results in a proportionally larger increase in investment spending due to expected higher demand for products.