If an Economy Is in a Recession, and the Government

question 77

Multiple Choice

If an economy is in a recession, and the government increases its spending to bring the economy back to its long-run equilibrium, the long-run level of output will:

• A) return, but with higher prices.
• B) return, as will the original price level.
• C) return, but with lower prices.
• D) not return.

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a company's assets over time.

Trade-In Allowance

The amount deducted from the price of a new item for trading in something old.

Double-Declining Balance Method

An accelerated depreciation method that doubles the normal depreciation rate, reducing the asset's book value more quickly.

Depreciable Cost

The total cost of an asset that is subject to depreciation, typically considering its purchase price less any salvage value.