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:

Exhaustion Stage

is the final phase of the stress response, where the body runs out of energy for fighting stress and can lead to significant health issues.

Alarm Reaction Stage

The initial stage of the General Adaptation Syndrome, involving the body's immediate reaction to stress, including the release of stress hormones.

Formal Operational Stage

Piaget’s fourth stage, characterized by abstract logical thought and deduction from principles.

Adrenal Medulla

The inner part of the adrenal gland that secretes adrenaline and noradrenaline, hormones involved in the body's fight-or-flight response.