The Reduction in Aggregate Demand Caused by Deflation

question 131

Multiple Choice

The reduction in aggregate demand caused by deflation:

• A) further reduces prices, causing a deflationary spiral.
• B) decreases production and raises prices back to their original level.
• C) further reduces prices, causing aggregate supply to shift back to its long-run equilibrium.
• D) decreases production and increase prices, mitigating the effects of the initial deflation.

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Definitions:

Marketing of Services

Strategies and approaches used to promote and sell non-tangible products, such as banking, cleaning, or educational services.

Sustainable Competitive Advantage

A unique advantage that allows a company to outperform its competitors over a long period.

Heterogeneous

Consisting of elements or parts that are different from each other; diverse in character or content.

Procedural Fairness

Refers to the customer’s perception of the fairness of the process used to resolve complaints about service.