In the First Half of 2008, Food and Energy Costs

question 11

Multiple Choice

In the first half of 2008, food and energy costs in the United States increased. At the same time, the financial crisis slowed production. As a result, economists warned that the economy would

• A) suffer an inflationary gap.
• B) see a decrease in aggregate demand and an increase in long-run aggregate supply.
• C) experience stagflation.
• D) see an increase in potential GDP.

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Definitions:

Net Sales

The remaining revenue from sales after removing expenses related to returns, provisions for defective or unaccounted-for goods, and concessions.

Return on Total Assets

Return on total assets (ROTA) is a financial ratio that measures the profitability of a company in relation to its total assets.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenues.

Beginning Total Assets

The total value of all assets owned by a company at the start of a financial period.