An Inflationary Gap Caused by a Demand Shock Can Be

question 60

Multiple Choice

An inflationary gap caused by a demand shock can be addressed by _____ to _____.

• A) raising government spending; lower the unemployment rate
• B) raising taxes; lower the unemployment rate
• C) lowering government spending; lower the aggregate price level
• D) lowering taxes; lower the aggregate price level

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, generally derived from the company's profits.

Accounts Payable

Funds that a company is obligated to pay to its suppliers or lenders for products and services acquired on credit.

Retained Earnings

Retained earnings refer to the portion of net income which is retained by the corporation rather than distributed to its owners as dividends.

Closing Entries

Closing entries are journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts, preparing the books for the next period.