Everything Else Held Constant,an Increase in Financial Frictions ________ Aggregate

question 97

Multiple Choice

Everything else held constant,an increase in financial frictions ________ aggregate ________.

• A)increases;demand
• B)decreases;demand
• C)decreases;supply
• D)increases;supply

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Definitions:

Relevant Range

The span of activity levels within which the assumptions made about cost behavior and business operations are valid.

Variable Cost

Financial outlays that change directly with changes in production or sales amounts, such as direct labor and raw materials.

Incremental Manufacturing Cost

The additional costs incurred when increasing production by one additional unit.

Production Increase

Refers to the rise in the quantity of goods or services that a company produces over a given period.