Consider the AD/AS Model

question 50

Multiple Choice

Consider the AD/AS model. In the long run, after factor prices have fully adjusted to any output gaps, real GDP

• A)is determined by aggregate demand and the price level by potential output.
• B)and the price level are determined by "long- run aggregate supply".
• C)is determined by AD and the price level is determined by the AS curve.
• D)and the price level are determined by aggregate demand.
• E)is determined by potential output and the price level by aggregate demand.

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Definitions:

Consolidated Financial Statements

Financial documents that combine the accounting records of a parent company and its subsidiaries, presenting the financial position as if they were a single entity.

Equity Method

An accounting technique used to assess the profits earned by a company through its investment in another company, recognizing income or loss in proportion to its ownership share.

Consolidated Current Liabilities

The combined total of all short-term financial obligations and debts of a parent company and its subsidiaries, due within one year.

Excess Consideration

The amount paid by an acquiring company over and above the fair value of the net identifiable assets of the acquired company, often recorded as goodwill.