A Supply Shock

question 141

Multiple Choice

A supply shock

• A) is usually caused by a change in the money supply
• B) is any event that causes the aggregate supply curve to shift
• C) is any event caused by a change in the price level
• D) is usually good news for the economy
• E) always leads to an increase in the interest rate

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Definitions:

Prepaid Insurance

An asset account that reflects insurance payments that are made in advance for future insurance coverage periods.

Retained Earnings

The portion of net income that is not distributed to shareholders but instead reinvested in the business or used to pay off debt.

Insurance Expense

The cost incurred by an entity to obtain insurance coverage, recognized as an expense over the period the insurance provides coverage.

Post-Closing Trial Balance

A list of all accounts and their balances after closing entries are made, used to check the balance of debits and credits.