Figure 17-11 -Refer to Figure 17-11.In the Dynamic Model of AD-AS in Model

question 37

Multiple Choice

Figure 17-11

-Refer to Figure 17-11.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,and the Federal Reserve pursues no policy,then at point B

• A) there is pressure on wages and prices to rise.
• B) the unemployment rate is very, very low.
• C) firms are operating above their normal capacity.
• D) the economy is below full employment.

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Definitions:

Extraordinary Gains

Unusual and infrequent gains recognized in a company's financial statements, separate from regular business operations.

Unrealized Losses

Losses on investments that have not been sold or settled and are still held by the company.

Cost of Goods Sold

Calculates the direct costs attributable to the production of the goods sold by a company, including materials and labor.

Extraordinary Items

Events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence, no longer classified separately in financial statements as of recent accounting standards.