Imagine That Businesses in General Believe That the Economy Is

question 54

Multiple Choice

Imagine that businesses in general believe that the economy is likely to head into recession and so they reduce capital purchases.Their reaction would initially shift

• A) aggregate demand right.
• B) aggregate demand left.
• C) aggregate supply right.
• D) aggregate supply left.

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Definitions:

Market Power

The ability of a company or group of companies to control prices and total market output in an industry or sector.

Elastic Demand

Describes a market scenario where the demand for a product significantly changes in response to changes in the price of that product.

Less Elastic

Less elastic refers to a demand or supply that is relatively unresponsive to changes in price compared to a perfectly elastic curve.

Increase Price

A decision by a supplier or manufacturer to raise the cost at which goods or services are sold.