Given the Expected Price Level,policies for Reaching Potential GDP Will

question 122

Multiple Choice

Given the expected price level,policies for reaching potential GDP will work best if the money supply is

• A)large,so that prices at potential GDP are below expectations and people can afford to buy enough goods to support the natural level of employment
• B)large enough that prices at potential GDP are above expectations and firms can afford to hire workers
• C)small,so that prices at potential GDP are below expectations and people can afford to buy enough goods to support the natural level of employment
• D)small,so that prices at potential GDP are above expectations and firms can afford to hire the workers
• E)exactly the size that makes prices equal to the prices people expected to prevail

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Definitions:

Accounts Receivable

The balance of money owed to a company by its customers for goods or services delivered or used but not yet paid for.

Credit

An entry recording an increase in assets or decrease in liabilities and equity on the company’s balance sheet, or the provision of goods or services in exchange for a promise of payment in the future.

Equity

The value of an ownership interest in property, including shareholders' equity in a company, represented by the assets minus liabilities.

Revenues

The total amount of money generated by the sale of goods, services, or other income for a company before any expenses are deducted.