The "Yes - Markets Self-Adjust" Camp Argues That in a Recessionary

question 102

Multiple Choice

The "Yes - Markets Self-Adjust" camp argues that in a recessionary gap, all of these market adjustments will happen except,

• A) price adjustments in the loanable funds market fix the saving problem for Say's Law.
• B) falling wage rates decrease the quantity of labour demanded.
• C) falling interest rates increase business investment.
• D) falling output prices increase aggregate quantity demanded.
• E) falling output prices increase net exports.

---

Definitions:

Producer Surplus

The discrepancy between what sellers are prepared to accept for a commodity and the real payment they secure from selling it at the prevailing market price.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that suppliers are willing to sell, typically upwards sloping.

Consumer Surplus

The difference between the sum total consumers are ready and capable of contributing towards a good or service and what they genuinely contribute.

Price Floor

A government-imposed minimum price below which a specific good or service cannot legally be sold, aimed at protecting producers or encouraging certain activities.