According to the "Self-Correcting Mechanism" in the AD-AS Framework,________

question 33

Multiple Choice

According to the "self-correcting mechanism" in the AD-AS framework,________.

• A)the aggregate demand curve shifts up or down as needed to bring the economy to full employment
• B)the inflation rate changes as needed to move the economy along the short-run aggregate supply curve until output is at potential output
• C)the long-run aggregate supply curve shifts until it intersects both the aggregate demand and short-run aggregate supply curves at a single point
• D)inflation and expected inflation are unaffected by deviations of output from potential output
• E)none of the above

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Definitions:

Factoring Transaction

A financial transaction where a business sells its accounts receivable to a third party (the factor) at a discount.

Total Assets

The sum of all assets owned by an entity, as recorded on the balance sheet, representing the resources controlled by the entity.

Adjusting Entry

An accounting journal entry made at the end of an accounting period to allocate income and expenditures to the appropriate period, ensuring compliance with the accrual basis of accounting.

Allowances for Doubtful Accounts

A contra-asset account that reduces the total amount of accounts receivable to reflect the portion that is estimated not to be collected.