If the Economy Is at Potential Output and the Bank

question 6

Multiple Choice

If the economy is at potential output and the Bank of Canada decreases the money supply so that actual output is less than potential output,eventually nominal wages will_____ and short-run aggregate supply will _____.

• A) increase;increase
• B) increase;decrease
• C) decrease;increase
• D) decrease;decrease

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Definitions:

Vouchers Payable

Short-term obligations or liabilities that represent amounts owed to suppliers or creditors, which are supported by documentary evidence of the transaction.

Accounts Payable

Liabilities or amounts owed to creditors for goods and services that have been received but not yet paid for by the business.

Gross Method

An accounting method for recording purchases at the full invoice price without deducting any cash discounts at the time of purchase.

Check Register

A record of all checks written, deposits made, and charges or credits to a bank account, used for managing funds and reconciling bank statements.