The Economy's Self-Correcting Mechanism

question 169

Multiple Choice

The economy's self-correcting mechanism

• A)tends to push unemployment toward a specific point called the natural rate of unemployment.
• B)works better at correcting inflationary gaps than recessionary gaps.
• C)cannot work if the Phillips curve is vertical.
• D)ensures that the economy will not have to endure a long period of high unemployment.

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Definitions:

Posting

The act of recording financial transactions in the appropriate ledger accounts as part of the accounting process.

Analyzing Business Transactions

The process of reviewing, categorizing, and interpreting the financial activities within a business to understand their impact on the financial statements.

Preparing Closing Entries

The procedure of transferring all income statement balances to permanent accounts at the end of an accounting period to prepare for the next period.

Fiscal Year

A one-year period that companies use for financial reporting and budgeting, which does not necessarily align with the calendar year.