A) Supply Creates Its Own Demand

question 90

Multiple Choice

• A) supply creates its own demand.
• B) nominal wages are (at least for a time) inflexible downward.
• C) firms misperceive the price-level decline as being permanent.
• D) deflation reduces the purchasing power of the dollar.

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Definitions:

Conservatism Constraint

An accounting principle that provides guidance for uncertain conditions, advising to recognize expenses and liabilities sooner rather than later.

Historical Cost Principle

An accounting principle that states that assets should be recorded and reported at their original purchase cost.

Work in Process

Inventory that includes goods that are in the process of being manufactured but are not yet complete.

Finished Goods Inventory

Manufactured goods that are complete and ready for sale.