If the Economy Is near Full Capacity, the Effect of a Negative

question 341

Multiple Choice

If the economy is near full capacity, the effect of a negative aggregate demand shock is to

• A) increase the level of aggregate demand.
• B) cause the price level 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:

Ongoing Operations

The continuous activities and processes that are performed by an organization to maintain its business and services.

Feedforward

is a communication process that involves giving future-oriented feedback to help someone adjust their actions before they engage in a specific behavior.

Input-Throughput-Output Cycle

A model or process that describes how input (resources, information) is processed (throughput) to produce a certain output (products, services).

Relevant Phases

Pertains to the specific stages or segments within a process or project that are significant and pertinent to its successful completion.