-Refer to Figure 15-11

question 117

Multiple Choice

-Refer to Figure 15-11.Suppose the economy is currently at point D where it is producing its full-employment level of real GDP ($6.8 trillion) .We would expect that,in the long run,

• A) the economy will return to point D unless a demand or supply shock occurred
• B) wages will fall and aggregate demand will decrease
• C) wages will rise and aggregate demand will increase
• D) wages will fall and aggregate supply will increase as the economy moves to point C
• E) the full-employment level of real GDP would fall to the equilibrium level of real GDP.

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Definitions:

Capital Stock

The total amount of shares that a company can issue as authorized by its corporate charter, representing ownership in the company.

Redeemed Stock

Shares that have been bought back or repaid by the issuing company.

Financial Leverage

Financial leverage is the use of borrowed funds to increase the potential return of an investment, magnifying both potential gains and potential losses.