The Government Might Increase Its Spending to End a Recession

question 7

Multiple Choice

The government might increase its spending to end a recession because:

• A)allowing the short-run aggregate supply to adjust back to the long-run can take a long time.
• B)the economy experiences lower prices at the long-run equilibrium.
• C)the economy enjoys a higher level of output in the long run.
• D)None of these justify why the government might change its spending to end a recession.

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Definitions:

Ending Inventory

The cost of merchandise ready for sale when an accounting cycle ends.

Average Cost Flow Methods

This inventory valuation method calculates the cost of goods sold and ending inventory based on the weighted average cost of all units available for sale.

Gross Profit

The financial metric calculated by subtracting the cost of goods sold from total sales revenue.

Ending Inventory

The total value of all goods available for sale at the end of an accounting period, calculated as the beginning inventory plus purchases minus the cost of goods sold.