Use the Following to Answer Questions

question 189

Multiple Choice

Use the following to answer questions :
Figure: Short- and Long-Run Equilibrium
-(Figure: Short- and Long-Run Equilibrium) Look at the figure Short- and Long-Run Equilibrium. The government should _____ aggregate demand by _____ taxes to close the _____ gap.

• A)expand; increasing; inflationary
• B)reduce; cutting; inflationary
• C)expand; cutting; recessionary
• D)reduce; increasing; recessionary

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Definitions:

Cost Flow

The manner in which costs move through a company's inventory accounts to eventually become cost of goods sold.

FIFO

An inventory valuation method which assumes that the first goods purchased or produced are also the first ones sold, also known as "First In, First Out."

Ending Inventory

The worth of products ready for purchase at the close of a financial period.

Cost Flow Assumption

The method used by businesses to value inventory and calculate the cost of goods sold, based on the order in which products are bought or produced.