Other Things Equal,in the Short Run a Lower Price Level

question 174

Multiple Choice

Other things equal,in the short run a lower price level leads households to

• A)increase consumption and firms to buy more capital goods.
• B)increase consumption and firms to buy fewer capital goods.
• C)decrease consumption and firms to buy more capital goods.
• D)decrease consumption and firms to buy fewer capital goods.

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Definitions:

Employee Discounts

Reduced prices offered to employees by their employer as a part of their employment benefits or incentives.

Periodic Inventory System

An inventory accounting system where updates to inventory records are made on a periodic basis, not continuously.

Physical Inventory

A process of counting and verifying the actual inventory on hand at a business location, typically performed at the end of an accounting period.

Merchandise Purchases

Transactions involved in buying goods for resale in the normal course of business, typically constituting a significant expense for retail companies.