Companies Can Increase Prices If Costs Are Low Because of Process

question 37

True/False

Companies can increase prices if costs are low because of process efficiencies in manufacturing.

Understand the concept of Marginal Propensity to Consume (MPC) and Marginal Propensity to Save (MPS).

Identify and analyze the equilibrium level of Gross Domestic Product (GDP).

Interpret the effects of changes in aggregate expenditure components on GDP.

Understand the relationship between real GDP, aggregate expenditure, and planned investment.

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Definitions:

Interest Rate Effect

The impact that changes in interest rates have on consumer spending due to the cost of borrowing; generally, as interest rates rise, consumer spending decreases.

Aggregate Demand

The cumulative need for all economic goods and services, pegged at a singular overall price level during a distinct time period.

Substantial Unemployment

A situation where there is a significantly high rate of unemployment in a particular area, reflecting a large number of people unable to find jobs.

Wages

Compensation paid to employees for their labor or services, typically calculated on an hourly, daily, or piecework basis.