According to the Natural-Rate Hypothesis, Fluctuations in Aggregate Demand Affect

question 87

Multiple Choice

According to the natural-rate hypothesis, fluctuations in aggregate demand affect output in:

• A) both the short run and the long run.
• B) only in the short run.
• C) only in the long run.
• D) in neither the short run nor the long run.

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Definitions:

Direct Write-Off Method

A method of accounting for bad debts whereby companies directly remove (write off) uncollectible amounts from accounts receivable when they are deemed uncollectible.

Adjusting Entry

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

Net Realizable Value

The estimated selling price of an item in the ordinary course of business minus any costs associated with the sale or disposal of the item.

Bad Debt Expense

An estimated expense that represents the amount of receivables that a company does not expect to collect due to customers' inability to pay.