A Fall in the Price of a Good Causes Producers

question 324

Multiple Choice

A fall in the price of a good causes producers to reduce the quantity of the good they are willing to produce. This fact illustrates

• A) the law of supply.
• B) the law of demand.
• C) a change in supply.
• D) the nature of an inferior good.

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Definitions:

Implementation Lag

The time needed to introduce a change in monetary or fiscal policy.

Recognition Lag

The time it takes for policymakers to identify an economic issue or trend that requires intervention.

Active Policy

Economic strategies and measures actively implemented by a government to influence the economy, such as adjusting tax rates or spending.

Decision-making Lag

The delay between recognizing an economic issue and implementing policy actions to address it.