What Happens in an Economy When Aggregate Demand Decreases

question 45

Multiple Choice

What happens in an economy when aggregate demand decreases?

• A) The price level rises, output rises, and an expansion occurs.
• B) The price level rises, output falls, and a recession occurs.
• C) The price level falls, output rises, and an expansion occurs.
• D) The price level falls, output falls, and a recession occurs.

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Definitions:

Debt/Asset Ratios

A financial ratio that compares a company's total debt to its total assets, indicating the company's leverage.

Market Capitalization

The total market value of a company's outstanding shares, calculated by multiplying the current stock price by the total number of outstanding shares.

Variance of Earnings

A statistical measure that represents the degree of variation or dispersion of a company's earnings over a specified period.

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of data values, often used to measure the volatility of financial returns.