If Falling Prices Cause an Expectation of Even Lower Prices

question 137

Multiple Choice

If falling prices cause an expectation of even lower prices in the future,this argues for a relatively ________ AD curve,thus ________ the Pigou effect.

• A)steep,weakening
• B)steep,intensifying
• C)flat,weakening
• D)flat,intensifying

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Definitions:

Flexible Budget

A financial plan that adjusts or varies with changes in volume or activity.

Spending Variance

The difference between the budgeted amount of expenditure and the actual amount spent.

Facility Expenses

Costs associated with maintaining and operating a physical location or building, such as rent, utilities, and maintenance.

Spending Variance

The difference between the actual amount spent and the budgeted amount for a specific period or category.