Suppose That Nominal Aggregate Demand Falls by 4 Percent,and at the Same

question 74

Multiple Choice

Suppose that nominal aggregate demand falls by 4 percent,and at the same time every marginal cost also falls by 4 percent.The importance of menu cost theory is that in this situation the price level ________,meaning that a recession ________.

• A)must fall by 4 percent as well,does not occur
• B)must fall by 4 percent as well,must occur
• C)still might not fall,may not occur
• D)still might not fall,may occur

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Definitions:

Operating Budgets

Detailed financial plans that outline expected income and expenditures related to the daily operations of an organization for a specific period.

Maslow's Theory

An explanation of motivation that suggests individuals are propelled to satisfy a progression of needs starting from the most basic physiological necessities up to higher levels of psychological fulfillment.

Physiological Needs

The most basic human needs including food, water, warmth, and rest, which are foundational for survival, as identified in Maslow's hierarchy of needs.

Self-actualization Needs

The highest level in Maslow's hierarchy of needs, characterized by the realization of a person's potential, self-fulfillment, seeking personal growth, and peak experiences.