Refer to the Graphs

question 221

Multiple Choice

Refer to the graphs. Which of the following best represents a negative demand shock when prices are inflexible?

• A) the shift from D2 to D3 in graph B
• B) the shift from D2 to D3 in graph A
• C) the shift from D2 to D1 in graph B
• D) the shift from D2 to D1 in graph A

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Definitions:

Journal Entry

A recording of a financial transaction in an accounting journal, indicating the accounts and amounts to be debited and credited.

Interest Expense

The cost incurred by an entity for borrowed funds; interest payments made on debt.

Contract Rate

The agreed-upon rate specified in a contract for the provision of goods or services, often discussed in the context of interest rates or wages.

Market Rate

The prevailing interest rate available in the marketplace for securities or loans.