Use the Following to Answer Questions

question 35

Multiple Choice

Use the following to answer questions .
Exhibit: Using the Aggregate Demand/Aggregate Supply Model 1
-(Exhibit: Using the Aggregate Demand/Aggregate Supply Model 1) Suppose the economy is initially in short-run equilibrium at B. If policy-makers decide to intervene to close the gap, which of the following can it do?

• A) Decrease personal income taxes.
• B) Increase government welfare spending.
• C) Decrease the level of government purchases of goods and services.
• D) Institute investment tax credits to encourage business investment.

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Definitions:

Quick Ratio

A measure of a company's ability to meet its short-term obligations with its most liquid assets, calculated as (Cash + Marketable Securities + Accounts Receivable) / Current Liabilities.

Current Ratio

A ratio indicating how well a company can cover its short-term dues.

Receivable Turnover Ratio

A financial metric that measures how efficiently a company collects cash from its credit sales by comparing net credit sales with the average accounts receivable.

Cash Dividend

A payment made in cash to shareholders that is derived from a company's profits or reserves.