A Decrease in the Demand for a Product Will Cause

question 37

Multiple Choice

A decrease in the demand for a product will cause output of that product to

• A) increase and the demand for and prices of the resources used to produce the product to rise.
• B) decrease and both the demand for and prices of the resources used to produce the product to fall.
• C) decline; the demand for the resources used to produce the product will remain constant.
• D) increase; the price of resources used to produce the product will rise if their supply is elastic but fall if supply is inelastic.

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Definitions:

Money Supply

The total amount of monetary assets available in an economy at a given time.

Prolonged Inflation

An extended period of time during which prices in an economy consistently rise, diminishing purchasing power.

Monetarist

An economist who believes that variations in the money supply have major influences on national output in the short run and the price level over longer periods.

Keynesian

An economic theory suggesting that increased government expenditures and lower taxes can stimulate demand and pull the global economy out of a recession.