When Most Consumers and fiRms Reduce Spending Only Because They

question 222

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:

Functional Currency

The primary currency of the primary economic environment in which the entity operates, usually the local currency or the currency of the primary sales market.

Current Rate Method

A method of foreign currency translation where assets and liabilities are converted at the current exchange rate.

U.S. GAAP

Stands for United States Generally Accepted Accounting Principles, which are the accounting standards used by companies in the United States to prepare their financial statements.

Functional Currency

The currency of the primary economic environment in which an entity operates and generates cash flows.