Figure 27-1 -Refer to Figure 27-1.Suppose the Economy Is in Short-Run Equilibrium

question 19

Multiple Choice

Figure 27-1
-Refer to Figure 27-1.Suppose the economy is in short-run equilibrium above potential GDP and no policy is pursued.Using the static AD-AS model in the figure above,this would be depicted as a movement from

• A)D to C.
• B)A to E.
• C)C to D.
• D)C to B.
• E)E to A.

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Definitions:

Subsidiary's Shareholders' Equity

The net assets attributable to the shareholders of a subsidiary, consisting of share capital plus retained earnings.

Acquisition Differential

The difference between the purchase price of an acquired company and the book value of its assets and liabilities.

Push Down Accounting

An accounting method in which the financial statements of a subsidiary are adjusted to reflect the parent company's basis of assets, liabilities, and any goodwill created in the acquisition.

Negative Acquisition Differential

occurs when the sum of the fair values of identifiable net assets exceeds the cost of acquisition, leading to an immediate gain in the acquirer's financial statement.