Use the Following to Answer Questions

question 115

Multiple Choice

Use the following to answer questions:
-(Figure: AD-AS) Refer to Figure: AD-AS.If our economy is at equilibrium and the Bank of Canada uses expansionary monetary policy,_____ will shift to _____ and the economy will move from _____.Then nominal wages will _____ and _____ will shift to _____.The economy will move from _____.

• A) AD₂;AD₁;E₂ to E₁;rise;SRAS₁;SRAS₂;E₂ to E₃
• B) SRAS₁;SRAS₂;E₂ to E₃;stay the same;AD₂;AD₁;E₂ to E₁
• C) SRAS₂;SRAS₁;E₃ to E₂;stay the same;AD₂;AD₁;E₂ to E₁
• D) AD₁;AD₂;E₁ to E₂;rise;SRAS₁;SRAS₂;E₂ to E₃

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Definitions:

Purchase Discounts

Reductions in the price of goods that a buyer is entitled to for early payment or volume purchases.

Freight-In

Costs associated with bringing inventory to a business location, typically included in the inventory cost.

GAAP

Generally Accepted Accounting Principles; the standard framework of guidelines for financial accounting used in any given jurisdiction, commonly the U.S.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, culminating in the net income.