The Leftward Shift of the AD Curve During 2007 Occurred

question 1

Multiple Choice

The leftward shift of the AD curve during 2007 occurred partly because of

• A)higher net exports.
• B)a balanced federal government budget.
• C)an increase in consumer confidence.
• D)a stock market crash.
• E)the Fed lowering interest rates.

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Definitions:

Acid-Test Ratio

A liquidity ratio that measures a company's ability to pay off its current liabilities with quick assets.

Company's Liquidity

The ability of a company to meet its short-term financial obligations by quickly converting assets into cash without significant loss.

Gross Margin Ratio

A financial metric that measures a company's financial health by dividing its gross profit by net sales, indicating the percentage of sales revenue remaining after deducting the cost of goods sold.

Profitability

The ability of a business to generate earnings compared to its expenses and other costs incurred during a specific period.