A Decrease in Demand Will Result In

question 23

Multiple Choice

A decrease in demand will result in:

• A) more firms in the industry
• B) less firms in the industry
• C) equal number of firms, just less output
• D) not enough information to answer

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Definitions:

Money Supply

The total financial resources in an economy at a particular time, made up of cash, coins, and the holdings in checking and savings accounts.

Inflation

An increase in the average cost of goods and services, resulting in a drop in the value of purchasing power.

Unemployment Rate

The unemployment rate represents the proportion of the workforce that is without a job and is actively looking for work.

Monetary Neutrality

The theory that changes in the money supply only affect nominal variables (like prices) and not real variables (like output) in the long run.