Consider the Basic AD/AS Macro Model

question 87

Multiple Choice

Consider the basic AD/AS macro model. A rise in an input price like the price of oil would be expected to cause a new macroeconomic equilibrium in which the price level

• A)and real GDP are lower than in the initial equilibrium.
• B)is lower and real GDP higher than in the initial equilibrium.
• C)is higher and real GDP lower than in the initial equilibrium.
• D)is higher and real GDP remained the same as in the initial equilibrium.
• E)and real GDP are higher than in the initial equilibrium.

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Definitions:

Accounts Receivable Turnover

A financial metric indicating how many times a company collects its average accounts receivable balance in a year.

Cash Cycle

The duration of time it takes for a company to convert its investments in inventory back into cash through sales.

Cash Cycle

The period between the outlay of cash for goods/services and the return of cash through customer payments, reflecting the liquidity and efficiency of a company.

Accounts Payable Period

The average time it takes for a business to pay off its suppliers after receiving inventory or services.