If You Were to Use an Aggregate Supply Aggregate Demand

question 17

Multiple Choice

If you were to use an Aggregate Supply Aggregate Demand diagram to model nondiscretionary and discretionary fiscal policy in reaction to a positive aggregate demand shock, you would see the aggregate demand curve move

• A)to the right as a result of the shock.
• B)to the left as a result of the shock.
• C)back toward its pre-shock position as a result of these policies.
• D)to the right, back toward its pre-shock position as a result of these policies.

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Definitions:

Revenue Recognition

The accounting principle that determines the specific conditions under which income becomes recognized as revenue.

Statement

A financial report providing information about an entity's financial position, performance, or changes in financial position, which can influence economic decisions.

Cheque

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer or to a specified person.

Accrual Basis of Accounting

A bookkeeping approach that documents income and costs at the time they are accrued, irrespective of the actual timing of cash receipts or payments.