A Substantial Decrease in the Aggregate Price Level That Reduces

question 12

Multiple Choice

A substantial decrease in the aggregate price level that reduces firms' net worth may stall a recovery from a recession. This process is called

• A)debt deflation.
• B)moral hazard.
• C)insolvency.
• D)illiquidity.

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Definitions:

Household Incomes

The total amount of money earned by every member of a household, including wages, salaries, benefits, and other sources of income.

Microchips

Small semiconductor devices that contain integrated circuits used for various types of electronics and devices.

Equilibrium Price

The equilibrium price where the supply of items perfectly aligns with the demand for them in the marketplace.

Computers

Electronic devices designed to accept data, perform prescribed mathematical and logical operations at high speed, and display the results of these operations.