Figure 27-3 -In the New Classical Model in Figure 27-3,the Initial Impact

question 11

Multiple Choice

Figure 27-3
-In the new classical model in Figure 27-3,the initial impact of an unanticipated monetary expansion ________.

• A) increases output from Yn to Y2, and the inflation rate from P1 to P2
• B) decreases output from Yn to Y4, and the inflation rate from P3 to P4
• C) does not change output and increases the inflation rate from P1 to P3
• D) does not change output and decreases the inflation rate from P3 to P1

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Definitions:

Conservatism Principle

An accounting principle that advises reporting expenses and liabilities as soon as possible, but revenue only when it is ensured.

Gross Profit Method

An inventory valuation method used to estimate the cost of goods sold and ending inventory levels by applying a gross profit margin to sales.

Gross Profit Ratio

The gross profit ratio is a financial metric that measures the proportion of money left over from revenues after accounting for the cost of goods sold (COGS), expressed as a percentage.

Estimated Cost

An approximation of the cost or expenditure associated with an activity, project, product, or service, made in the absence of precise information.