When prices start falling in the economy and margins shrink, this implies that:
A) demand is growing at a slower rate than supply.
B) supply in the economy is falling.
C) the economy is at the peak of a boom.
D) the economy is expanding.

Question

Quizplus · Accepted Answer

When prices fall and margins shrink, it typically indicates that supply is outpacing demand, meaning demand is growing at a slower rate than supply. This leads to an excess of goods or services, causing prices to drop as sellers compete for buyers.

When Prices Start Falling in the Economy and Margins Shrink