A decrease in the price level results in a(n) ________ in ...

[Capo]

A decrease in the price level results in a(n) ________ in household consumption spending and a(n) ________ in investment spending.
 
  A) increase; increase B) decrease; increase C) increase; decrease D) decrease; decrease

Question 2

Explain whether Delta Airlines' sales are likely to fluctuate more or less than the sales of each of the following firms as the economy moves from recession to expansion and back to recession.
 
  Whirlpool Corporation (appliance manufacturer)
   Taco Bell
   The Boeing Company (aircraft manufacturer)
   GameStop (video game sales and rentals)

[ynlevi]

Answer to Question 1

A

Answer to Question 2

Delta's sales are likely to fluctuate during the business cycle less than the sales of Whirlpool and Boeing, but more than the sales of Taco Bell and GameStop. Appliances and aircraft are expensive durable goods that are sensitive to changes in economic conditions. On the other hand, fast food and video games are relatively inexpensive consumer goods that are relatively less sensitive to changes in economic conditions.