Suppose Aggregate Demand Fell

question 3

Multiple Choice

Suppose aggregate demand fell.In order to stabilize the economy,the government might

• A)decrease the money supply.
• B)decrease government expenditures.
• C)decrease taxes.
• D)do nothing.

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Definitions:

Variable Cost

A variable cost varies with the level of output or sales, meaning it increases as production increases and decreases as production decreases.

Net 30 Policy

A term indicating that payment is due in full 30 days after the goods are delivered or the service is completed.

Average Inventory

The mean value of all inventory a company holds over a certain period of time, reflecting the average amount of stock available.

Carrying Cost

The total cost of holding inventory, including storage, insurance, depreciation, and opportunity costs, among others.