When the SRAS Curve Slopes Upward, the Actual Affect of an Increase

question 44

Multiple Choice

When the SRAS curve slopes upward, the actual affect of an increase in real autonomous spending on equilibrium real GDP is smaller than predicted by the multiplier because

• A) the price level falls.
• B) the price level rises
• C) real GDP increases.
• D) real GDP decreases.

---

Definitions:

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations by comparing its interest expenses to its earnings before interest and taxes (EBIT).

Net Income

The net income of a company, which is the remaining amount after deducting all expenses and taxes from the total revenue.

Warranty Expense

Warranty expense is the estimated cost a company expects to incur for repairing, replacing, or compensating for defective products under warranty.

Estimated Warranty Liability

A provision in the financial statements estimating the cost a company expects to incur under its product warranty commitments.