According to the Keynesian Cross Model, fiRms Will Have to Reduce

question 27

Multiple Choice

According to the Keynesian Cross model, firms will have to reduce production when:

• A) there is excess demand for goods and services.
• B) inventory levels begin to fall.
• C) aggregate demand equals the level of national output.
• D) the level of national output exceeds aggregate demand.

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Definitions:

Average Collection Period

The average amount of time it takes for a company to receive payments owed by its customers.

Net Accounts Receivable

The total amount of money owed by customers for purchases made on credit, minus any provision for doubtful accounts.

Sales Returns

Transactions where customers return previously purchased merchandise, resulting in a refund or credit.

Bad Debt Expense

An expense recorded to account for receivables that are not expected to be collected, reflecting credit losses in the financial statements.