When Most Consumers and Firms Reduce Spending Only Because They

question 40

Multiple Choice

When most consumers and firms reduce spending only because they expect other consumers and firms to reduce spending, and a recession results,

• A)a self-correction has occurred.
• B)an adverse aggregate supply shock has occurred.
• C)a coordination failure has occurred.
• D)a real-business downturn has occurred.

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Definitions:

Damages

Monetary compensation claimed by a person or provided by a court as a remedy for a wrong or injury caused by another's act or default.

Goods

are tangible products or commodities that are produced or manufactured for sale.

Cost of Goods Available

Cost of Goods Available represents the total cost of merchandise available for sale during a certain period, including the beginning inventory plus net purchases.

Operating Expense

Costs associated with the normal day-to-day operations of a business, such as rent, utilities, and salaries, but excluding costs related to production.