-Based on the Keynesian Cross Diagram Above,if Potential Output Y

question 115

Multiple Choice

-Based on the Keynesian cross diagram above,if potential output Y* = 5,000,then at the short-run equilibrium,

• A) there is a recessionary gap.
• B) there is an expansionary gap.
• C) actual output equals potential output.
• D) firms will be producing more than they can sell.
• E) firms will be producing less than they can sell.

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Definitions:

Average Sale Period

estimates the average time it takes for a company to sell its inventory.

Accounts Receivable Turnover

A financial metric that measures how often a company collects its receivables over a time period.

Inventory Turnover

A ratio indicating how many times a company's inventory is sold and replaced over a specific period, helping assess efficiency in managing inventory levels.

Accounts Receivable Turnover Ratio

A financial metric indicating how effectively a company extends credit and collects debts on that credit; calculated by dividing net credit sales by average accounts receivable.