-The Reason That It Is Possible for the Economy in the Above

question 145

Multiple Choice

-The reason that it is possible for the economy in the above figure to be at E₂ rather than at E₁ is that

• A) in the long run there is always less than full employment.
• B) in the short run the economy can produce more than it can in a long-run full-adjustment situation.
• C) AD always shifts outward and never shifts inward.
• D) the economy must be in a recession.

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Definitions:

Goodwill

The excess value paid over the net assets of a company during acquisition, reflecting attributes like brand reputation and customer loyalty.

Retained Earnings

The portion of net income not distributed as dividends but retained by the company to reinvest in its core business or to pay debt.

Partial Equity Method

A variation of the equity method in accounting, where the investor recognises income from the investee to the extent of dividends received, with some adjustments.

Initial Value Method

An accounting method which records assets and investments at their original purchase cost.