If the AD Curve Shifts Rightward While the AS Curve

question 54

Multiple Choice

If the AD curve shifts rightward while the AS curve and potential GDP don't change, then

• A) there will be no change in real GDP, so the economy is at the peak of the cycle.
• B) there will be no change in real GDP, so the economy is at the trough of the cycle.
• C) the economy will move from a peak into a recession.
• D) the expansion phase of the business cycle occurs.
• E) real GDP does not change.

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Definitions:

Statement of Cash Flows

A financial overview explaining how modifications in balance sheet accounts and income levels impact cash and cash equivalents, analyzed through operating, investing, and financing operations.

Accounting Equation

The fundamental equation that represents the relationship between an entity's assets, liabilities, and owner's equity; Assets = Liabilities + Owner's Equity.

Revenue Recognition Principle

An accounting principle that stipulates revenue should be recognized and recorded when it is earned, regardless of when the cash is received.

Business Entity Principle

An accounting concept that treats a business as separate and distinct from its owners for purposes of recording financial transactions.