A Major That Resulted in the Leftward Shift of the Aggregate

question 72

Multiple Choice

A major that resulted in the leftward shift of the aggregate demand curve in late 2008 was

• A)a decrease in taxes.
• B)an increase in government spending.
• C)a price shock.
• D)a change in net exports.
• E)a decrease in consumer confidence.

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Definitions:

Monopolistic Competition

A market structure where many companies sell products that are similar but not identical, leading to competition based on factors other than price.

Over-Differentiation

refers to the creation of product variations that exceed customer needs or desires, potentially leading to confusion and reduced sales.

Monopolistically Competitive Industries

Industries in which many firms compete by selling products that are similar but not identical, allowing for product differentiation.

Lack of Variety

A situation in a market where there are few different options or types of products available to consumers, potentially leading to decreased consumer satisfaction.