How Many of the Following Business Cycle Facts Can Be

question 63

Multiple Choice

How many of the following business cycle facts can be explained if the primary cause of business cycles is temporary changes in total factor productivity: procyclical consumption, procyclical investment, procyclical employment, and procyclical real wages?

• A) one
• B) two
• C) three
• D) four
• E) none

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Definitions:

Balance Sheet Approach

A method of estimating an organization's value based on the assets, liabilities, and equity recorded in its balance sheet.

Allowance for Doubtful Accounts

A contra asset account used to estimate the amount of receivables that may not be collectible.

Accounts Receivable

Due amounts from clients to a company pertaining to goods or services delivered but payment not received.

Bad Debts Expense

An estimated expense that reports the cost of accounts receivable that a company does not expect to collect.