If Households and Firms Cut Back on Spending Because They

question 113

Multiple Choice

If households and firms cut back on spending because they expect other households and firms to do so, and this self-fulfilling prophecy causes a recession, then this would be an example of

• A)insider-outsider relationships.
• B)efficiency wage theory.
• C)a coordination failure.
• D)a price-level surprise.

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Definitions:

Physiological Needs

Basic physical requirements essential to human survival, such as air, water, food, shelter, and sleep, posited by Maslow as the foundation of his hierarchy of needs.

Modern Conveniences

Technologies, devices, or services that simplify tasks and make daily life easier compared to past times.

Fulfillment

The achievement of something desired, promised, or predicted, or a sense of happiness or satisfaction resulting from achieving one's potential or realizing one's desires.

Self-Actualize

The realization or fulfillment of one's talents and potentialities, especially considered as a drive or need present in everyone.