Compared to an Initial Long-Run Equilibrium,an Aggregate Supply Shock That

question 17

Multiple Choice

Compared to an initial long-run equilibrium,an aggregate supply shock that reduces potential output results in a(n) _________ gap in the short run,and _________ output and _________ inflation in the long run.

• A) expansionary;lower;lower
• B) expansionary;lower;higher
• C) expansionary;higher;higher
• D) recessionary;potential;higher
• E) recessionary;lower;higher

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Definitions:

Accumulated Deficit

Accumulated deficit is a negative balance in retained earnings, indicating that a company's losses have exceeded its profits over time.

Statement Of Financial Position

A financial statement that shows the assets, liabilities, and equity of an entity at a specific point in time, providing a snapshot of its financial condition.

Net Debt

A financial metric calculated by subtracting total cash and cash equivalents from total debt, indicating a company's ability to pay off its debts if they were all due immediately.

Non-Business Organization

An entity that operates for purposes other than making a profit, such as charities, educational institutions, and government agencies.