The Degree of Responsiveness of Aggregate Output to a Price

question 55

Multiple Choice

The degree of responsiveness of aggregate output to a price change declines as the:

• A) rate of savings increases.
• B) economy approaches its maximum potential output.
• C) level of real GDP declines over time.
• D) the price elasticity of imports declines.
• E) the excess capacity of all the firms in the economy increases over time.

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Definitions:

Adjustments Column

A column in accounting ledgers or tables used to record changes or corrections to initial entries prior to preparing financial statements.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account columns to ensure a company's bookkeeping system is mathematically correct.

Accounting Cycle

The comprehensive process of recording and processing all financial transactions of a company, from when the transaction occurs, to its representation on the financial statements.

Adjusted Trial Balance

A version of the trial balance that reflects account balances after adjustments are made for accruals, deferrals, and errors.