In the Mainstream View, the Severe Recession of 2007-2009 Was

question 46

Multiple Choice

In the mainstream view, the severe recession of 2007-2009 was caused by

• A)an aggregate-supply shock, which caused the AS curve to shift left.
• B)a financial crisis that caused a shrinkage in investment and consumption spending, thereby reducing aggregate demand.
• C)monetary factors, specifically the excessive expansion of money supply brought about by the Federal Reserve, starting in the recession of 2001.
• D)a huge and sudden drop in the velocity of money, causing a significant reduction in both nominal and real GDP.

Classify balance sheet accounts into relevant categories.

Differentiate between assets, liabilities, and stockholders' equity and identify normal debit or credit balances.

Recognize and categorize transactions as investing or financing activities in the statement of cash flows.

Describe the purpose and components of the general journal and general ledger.

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Definitions:

Utility-Maximizing

The principle or practice of selecting goods and services for consumption to achieve the highest level of overall satisfaction or happiness.

Marginal Utility

The boost in satisfaction or usefulness experienced from consuming an additional unit of a good or service.

Hypothetical Consumer

An assumed average consumer used in economic and marketing models to predict the behavior of consumer populations.

Utility-Maximizing

A principle in economics whereby individuals seek to optimize their satisfaction or happiness through the consumption of goods and services.