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:

Exposed Rocks

Rocks that are visible on the surface of the Earth and are not covered by soil or vegetation.

Oceanic Plateau

Underwater volcanic regions characterized by flat-topped mountains or plateaus, resulting from extensive eruptions of basaltic lava.

Island Arc

A curved chain of volcanic islands located along a subduction zone, formed by the rising magma from the descending tectonic plate.

Terranes

Distinct pieces of the crust that have been attached to a continent but originated elsewhere.