If There Was No Profit Effect,but There Was a Misperception

question 15

Multiple Choice

If there was no profit effect,but there was a misperception effect in the short run,how would the SRAS and LRAS curve be drawn?

• A)The SRAS and LRAS would both be vertical.
• B)The SRAS would be vertical and the LRAS would be upward sloping.
• C)The SRAS would be upward sloping and the LRAS would be vertical.
• D)The SRAS and LRAS would both be upward sloping.

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Definitions:

Journalize

The process of recording transactions in a journal before they are posted to ledger accounts.

Paid-In Capital

Funds raised by a company through the issuance of securities, reflecting the total amount of invested capital that shareholders have contributed directly.

Retained Earnings

Profits that a company keeps after dividends are paid, often reinvested into the business or used to pay off debt.

Preferred Stock

A type of stock that gives its holders preference over common stockholders in terms of dividends and claims on assets during liquidation.