If an Economy Is on the Vertical Portion of the Aggregate

question 257

Multiple Choice

If an economy is on the vertical portion of the aggregate supply curve, then it

• A) is overheating.
• B) is at full employment.
• C) has high unemployment.
• D) is in a severe recession.

---

Definitions:

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated by adding new purchases to beginning inventory and subtracting cost of goods sold.

Perpetual Inventory Account

An accounting method that records inventory purchases and sales in real time, providing a continuously updated inventory balance.

FIFO

"First In, First Out", an inventory valuation method where the costs of the oldest inventory items are the first to be recognized in determining cost of goods sold.

LIFO

"Last In, First Out," an inventory valuation method where the last items added to inventory are the first ones to be used or sold.