If an Unanticipated Reduction in Aggregate Demand Throws a Market

question 15

Multiple Choice

If an unanticipated reduction in aggregate demand throws a market economy into a recession,

• A) market forces will cause the economy to spiral downward and a lengthy period of depressed conditions is the expected result.
• B) lower real resource prices and interest rates will act as a stabilizing force and direct the economy back to its full employment potential.
• C) higher real resource prices and interest rates will help to direct a market economy back to its full employment potential.
• D) the natural rate of unemployment will rise until it is once again equal to the actual rate of unemployment.

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Definitions:

Genetic Predisposition

The increased likelihood or susceptibility to develop a particular disease or condition based on an individual's genetic makeup.

Business Model

A conceptual structure that supports the viability of a product or company and includes the purpose, target audience, revenue model, and details of financing, among other elements.

Startups

are newly established businesses, typically in the technology sector, characterized by their innovative products or services and scalability.

Flexible

Capable of being easily modified to adapt to new conditions or circumstances without significant difficulty.