Figure 11-2 -Refer to Figure 11-2.By Shifting the Demand Curve from D₁

question 57

Multiple Choice

Figure 11-2

-Refer to Figure 11-2.By shifting the demand curve from D₁ to D₂, the Fed is exercising ______ monetary policy to _______ interest rates.

• A)contractionary; lower
• B)expansionary; lower
• C)contractionary; increase
• D)expansionary; increase

Analyze the impact of inventory valuation errors on financial statements.

Determine the cost of ending inventory and cost-to-retail percentage using retail inventory methods.

Understand the effects of net markups, markdowns, and employee discounts on inventory valuation.

Calculate correct net income considering changes in inventory valuations due to errors or adjustments.

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Definitions:

Consumer Surplus

The variance between the aggregate amount consumers can and will pay for a good or service versus the amount they actually spend on it.

Producer Surplus

is the difference between what producers are willing to accept for a good or service versus what they actually receive.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in a stable market.

Producer Surplus

The difference between what producers are willing to accept for a product versus what they actually receive, measured by the area above the supply curve and below the market price.