Exhibit 16-2 -Exhibit 16.2 Shows the Price Level, Real GDP, and Potential

question 102

Multiple Choice

Exhibit 16-2

-Exhibit 16.2 shows the price level, real GDP, and potential output for an economy. According to those who favor a passive approach to policy, the economy will attain equilibrium at potential output when _____

• A) the SRAS curve shifts to the left.
• B) the SRAS curve shifts to the right.
• C) government spending increases.
• D) the money supply increases.
• E) aggregate demand decreases.

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Definitions:

Operating Cycle

The duration of time from the purchase of inventory to the collection of receivables from the sale of that inventory, critical for managing cash flow.

Accounts Payable Period

The average number of days it takes a company to pay off its suppliers and creditors.

Operating Cycle

The time period between the acquisition of inventory by a company and the receipt of cash from the sale of that inventory.