When Using the AD-AS Model to Understand Business Cycles, the Question

question 4

Multiple Choice

When using the AD-AS model to understand business cycles, the question, "what are the fundamental causes of business cycles?" can be thought of as the question:

• A)"what factors move the economy away from long-run equilibrium?"
• B)"what factors move aggregate demand and aggregate supply in different directions?"
• C)"what factors increase or decrease potential GDP?"
• D)"what factors increase or decrease the expected rate of inflation?"

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Definitions:

Calculate

A mathematical determination of one or more quantities, equations, or properties.

Period

A length of time in financial reporting, typically referring to a fiscal quarter or year, over which transactions are recorded and analyzed.

Schedule of Cost of Goods Manufactured

A detailed report showing the total production costs incurred by a company to produce goods during a specific period.

Cost of Goods Sold

The expenses directly associated with manufacturing the products that a company sells.