-Refer to the Graph in the Exhibit

question 21

Multiple Choice

-Refer to the graph in the exhibit.Suppose P₃ is the prevailing price level.How will prices be affected in the long run, assuming a hands-off policy by government?  

• A) The price level will rise.
• B) The price level will fall.
• C) The price level will remain the same.
• D) The price level will first rise, and then fall.

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Definitions:

Credits

Accounting entries that decrease assets or increase liabilities and equity on the balance sheet.

Debits

In accounting, debits are entries on the left side of an account ledger, indicating increases in asset or expense accounts, or decreases in liability, equity, or revenue accounts.

Credit

An accounting entry that represents an increase in liabilities or equity or a decrease in assets, opposite of a debit.

Offset Side

The side of a transaction that counterbalances the primary entry, ensuring the accounting equation remains balanced.