In the Very Long-Run AD-AS Model

question 27

Multiple Choice

In the very long-run AD-AS model,

• A)only fiscal policy can affect both output and prices
• B)only monetary policy can affect both output and prices
• C)monetary policy can affect output but not prices
• D)active stabilization policy is ineffective in changing output
• E)the unemployment rate is always assumed to be zero

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Definitions:

Unearned Revenue

Revenue received by a company for goods or services that are yet to be delivered or performed.

Cash

Money in the form of currency that is used to conduct transactions.

Reversing Entries

Journal entries that are recorded on the first day of the next period that are the exact opposite of the related adjusting entry from the last day of the prior period.

Adjusting Entries

Accounting records entries documented at the conclusion of an accounting cycle to distribute revenues and expenses to the period they genuinely took place.