In the Short Run in Periods of Low Inflation, an Increase

question 61

Multiple Choice

In the short run in periods of low inflation, an increase in aggregate demand from a position of full employment leads to:

• A) higher prices and higher unemployment.
• B) higher prices and higher output.
• C) lower prices and higher output.
• D) lower prices and higher unemployment.

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Definitions:

Receivables Period

The usual period a business needs to obtain payments from customers for goods or services sold on a credit basis.

Inventory Period

The time it takes for a company to turn its inventory into sales, often measured in days or weeks.

Cash Cycle

The period between the acquisition of inventory by a business and the collection of accounts receivable generated by the sale of that inventory.

Inventory Turnover

Inventory turnover is a ratio showing how many times a company's inventory is sold and replaced over a particular period, indicating the efficiency of inventory management.