Which of the Following Is Not Consistent with a Self-Correcting

question 120

Multiple Choice

Which of the following is not consistent with a self-correcting economy?

• A)Falling wages that correct a recessionary gap
• B)Falling prices that correct a recessionary gap
• C)Rising prices that correct an expansionary gap
• D)Tendency of the short-run aggregate supply to shift until it intersects aggregate demand at potential GDP
• E)An active approach to a recession or depression

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Definitions:

Nonrecurring Items

Financial events that are not expected to happen regularly in a company's business cycle, affecting the company's usual revenue or expenses.

Reported Income

The income that a company officially reports, usually on its income statement, reflecting the financial performance over a specific period.

Return on Assets (ROA)

A financial ratio that indicates how profitable a company is relative to its total assets, calculated as net income divided by total assets.

Return on Common Equity

A financial ratio indicating the amount of net income returned as a percentage of shareholders equity, measuring a company's profitability in generating profits from its equity financing.