If the Economy Is at Potential Output and the Fed

question 33

Multiple Choice

If the economy is at potential output and the Fed increases the money supply, in the SHORT run the aggregate demand will likely:

• A)shift to the left.
• B)remain the same.
• C)increase.
• D)decrease.

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Definitions:

Accrued Revenue

Revenue that has been earned, but not yet received in cash or recorded in the accounts.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate period for accurate financial reporting.

Owner's Equity

The residual interest in the assets of a business after deducting liabilities, representing the owner's claim against the company's assets.

Accumulated Depreciation

The cumulative depreciation of an asset up to a single point in its life, representing the wear and tear or usage.