Which of the Following Is an Example of a Demand

question 119

Multiple Choice

Which of the following is an example of a demand shock?

• A) Hurricane Harry knocks out oil drilling platforms in the Gulf of Mexico.
• B) Consumers become worried about job loss and buy fewer goods and services than expected.
• C) Floods in the Midwest destroy crops.
• D) The federal government unexpectedly requires automobile producers to raise fuel efficiency standards.

---

Definitions:

Minimum Required Rate

Refers to the lowest acceptable rate of return on investment that a business or individual expects to achieve.

Turnover

In business, turnover is the total amount of revenue generated by a company from the sale of goods or services, or it can refer to the rate at which employees leave a business and are replaced by new employees.

Minimum Required Rate

The lowest expected rate of return on an investment that makes it acceptable to an investor, considering risk and opportunity cost.

Residual Income

A measure of a company's profitability, calculated by subtracting the cost of capital from operating profits.