If Both Consumers and Businesses Are Pessimistic About the Future

question 62

Multiple Choice

If both consumers and businesses are pessimistic about the future of the economy

• A) there is a movement up along the aggregate demand curve.
• B) the aggregate demand curve shifts to the left.
• C) there is a movement down along the aggregate demand curve.
• D) the aggregate demand curve shifts to the right.

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Definitions:

Marginal Cost

Marginal Cost is the increase or decrease in the total cost of production resulting from producing one additional unit of a product.

Variable Cost

Refers to expenses that change in proportion to the production output or activity level of a company.

Fixed Cost

This is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

Diminishing Returns

An economic principle stating that adding an additional factor of production results in smaller increases in output after a certain point.