Beginning at Long-Run Equilibrium in the Dynamic Model of Aggregate

question 17

Multiple Choice

Beginning at long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, in the first period of a multi-period positive demand shock, output _____, and inflation _____.

• A)increases; increases
• B)increases; decreases
• C)decreases; decreases
• D)decreases; increases

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Definitions:

Equipment

Tangible assets used in operations, such as machinery and office hardware, which are subject to depreciation over their useful lives.

Debit

A financial record that boosts asset or expense ledgers or reduces liability, equity, or income ledgers.

Credit

An accounting entry that increases liabilities and equity or decreases assets, and in financial terms, it refers to the provision of resources (such as funds) by a creditor to a borrower.

Compound Entry

An accounting entry that involves more than two accounts, where there are multiple debits, multiple credits, or both in a single transaction.