Examlex

Solved

Suppose the Economy Is Initially in Long-Run Equilibrium

question 59

Multiple Choice

Suppose the economy is initially in long-run equilibrium. Now suppose oil prices rise sharply and at the same time, policymakers pursue expansionary monetary and fiscal policies. Which of the following will occur as a result of these two events?


Definitions:

Retained Earnings

The portion of net income that is not distributed to shareholders as dividends but is kept by the company to reinvest in its core business or to pay debt.

Liability Account

An accounting record that captures the amounts a company owes to creditors.

Creditors

Creditors are individuals or entities to whom a company owes money for goods or services that have been provided.

Related Questions