The Effect of an Adverse Demand Shock Is to

question 21

Multiple Choice

The effect of an adverse demand shock is to

• A)increase the level of aggregate demand.
• B)cause prices to fall.
• C)increase the firm's cost of producing at every level of output.
• D)increase the level of employment.

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Definitions:

Non-diversifiable Risk

The portion of risk that can't be eliminated through diversification, often related to systemic factors affecting all investments.

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of data values.

Systematic Risk

Systematic risk refers to the overall market risk that cannot be eliminated through diversification, affecting all investments to some extent.

Trade Deficit

A situation where a country's imports of goods and services exceed its exports, leading to a negative balance of trade.