The Downward Slope of the Demand Curve Is Related to The

question 122

Multiple Choice

The downward slope of the demand curve is related to the:

• A) Law of diminishing total returns.
• B) Law of diminishing marginal utility.
• C) Upward sloping supply curve.
• D) Opportunity cost of producing the gooD.

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Definitions:

Surplus

A situation where the quantity supplied of a good or service exceeds the quantity demanded at the current price.

Deflationary Gap

A situation where total spending (aggregate demand) in an economy is lower than the level required to sustain full employment output, leading to deflation and unemployment.

Equilibrium GDP

The level of Gross Domestic Product at which aggregate supply equals aggregate demand, leading to an economy operating at full capacity without inflationary pressures.

Full Employment GDP

The level of gross domestic product achieved when there is no cyclical unemployment in the economy, representing an ideal economic state where all willing and able workers find employment.