In a Recession, Consumers Have Less Income to Spend

question 87

Multiple Choice

In a recession, consumers have less income to spend. As a result, if dining out is a normal good, then which of the following would happen to the demand curve for dining out?

• A) The demand curve would shift rightward.
• B) The demand curve would not shift but the price of dining out would fall.
• C) The effect on the demand curve is unknown.
• D) The demand curve would not shift but the price of dining out would rise.
• E) The demand curve would shift leftward.

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Definitions:

Fair Values

The estimated market value of an asset or liability based on current transactions between willing parties.

Gain or Loss

The financial result that occurs when the selling price of an asset differs from its purchase price, either positive (gain) or negative (loss).

Goodwill

An intangible asset that represents the excess value paid for a company over its net identifiable assets, often arising from brand, reputation, or customer relationships.

Carrying Amount

The book value of an asset or liability, calculated as its original cost adjusted for factors such as depreciation or amortization.