For an Economy Starting at Potential Output, an Increase in Autonomous

question 93

Multiple Choice

For an economy starting at potential output, an increase in autonomous expenditure in the short run results in a(n) :

• A)expansionary output gap.
• B)recessionary output gap.
• C)increase in potential output.
• D)decrease in potential output.

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Definitions:

Liability Account

An accounting record that tracks the money owed by a business to creditors, lenders, and suppliers, part of the company's liabilities.

Direct Write-Off Method

This accounting practice writes off bad debts directly against income at the time they are determined to be uncollectible, bypassing any allowance account.

Allowance for Doubtful Accounts

This is an estimation of the amount of receivables that a company does not expect to actually collect, reflecting potential losses due to customers' inability to pay.

Uncollectible

Uncollectible refers to debts or receivables that are deemed to be impossible to collect, often resulting in a write-off by the business.