If There Is an Adverse Supply Shock, What Will Most

question 188

Multiple Choice

If there is an adverse supply shock, what will most likely happen?

• A) The aggregate supply curve and the short-run Phillips curve will both shift right.
• B) The aggregate supply curve and the short-run Phillips curve will both shift left.
• C) The aggregate supply curve will shift right, and the short-run Phillips curve will shift left.
• D) The aggregate supply curve will shift left, and the short-run Phillips curve will shift right.

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Definitions:

Estimated Bad Debts

A provision for accounts receivable that are expected not to be collected, thereby adjusting the value of gross receivables to a more realistic figure.

Uncollectible Account

An account receivable that a company deems unlikely to be collected and thus writes off as a bad debt expense.

Net Income

The total earnings of a company after subtracting all expenses from revenue, representing the profit made in a given period.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available for running day-to-day operations.