If Aggregate Demand Falls Short of Current Output,business Firms Will

question 119

Multiple Choice

If aggregate demand falls short of current output,business firms will ________ production to ________ inventories.

• A)cut;keep from accumulating
• B)expand;keep from accumulating
• C)cut;build up
• D)expand;build up

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Definitions:

Technical Substitution

The process of replacing one technique or technology with another that is more efficient or cost-effective.

Marginal Products

The additional output produced as a result of adding one more unit of a specific input, while holding other inputs constant.

Isoquants

Curves that represent combinations of inputs that yield the same output, used in the analysis of production technology.

Output Level

The total product units produced within a given time frame in a production process or economic system.