In the Long Run, How Would an Active Approach to a Recessionary

question 14

Multiple Choice

In the long run, how would an active approach to a recessionary gap differ from a passive approach to policy?  

• A) In an activist approach, both the price level and the level of real GDP would be higher in the long run. 
• B) In an activist approach, both the price level and the level of real GDP would be lower in the long run. 
• C) In an activist approach, only the price level would be lower in the long run. 
• D) In an activist approach, only the price level would be higher in the long run.

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Definitions:

Bank Reconciliation

The process of ensuring that a company’s bank account balance matches its financial records, identifying discrepancies and making adjustments as necessary.

Internal Controls

Systems and steps a corporation takes to verify the accuracy of financial and accounting reports, encourage responsible behavior, and stop dishonest practices.

Journal

A record where all financial transactions are entered in chronological order, serving as the initial place of recording.

Error Indicating

A term that refers to signals or signs that there are mistakes within a system or process.