Exhibit 16-3 
-In the situation shown in Exhibit 16-3, how could the Fed return the economy to potential output?
Definitions:
Periodic Inventory System
An inventory system where stock levels and cost of goods sold are calculated at the end of an accounting period, rather than updated continuously.
Net Method
An accounting method that records purchases after deducting any available discounts, directly showing the net purchase cost.
Credit Terms
Conditions under which credit will be extended to a customer, including repayment timeframe and interest rate.
Merchandise Inventory
Goods a company has in stock and available for sale, typically in a retail or wholesale setting.
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