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Which of the Following Would Be the Theoretical Outcome of Contractionary

question 94

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Which of the following would be the theoretical outcome of contractionary fiscal policy in the following aggregate demand-aggregate supply model, where LRAS is long-run aggregate supply and SRAS is short-run aggregate supply? Which of the following would be the theoretical outcome of contractionary fiscal policy in the following aggregate demand-aggregate supply model, where LRAS is long-run aggregate supply and SRAS is short-run aggregate supply?   A)  The aggregate demand (AD)  curve would shift from AD<sub>1</sub> to AD<sub>2</sub>. B)  The short-run aggregate supply (SRAS)  curve would shift from SRAS<sub>2</sub> to SRAS<sub>1</sub>. C)  The SRAS curve would shift from SRAS<sub>1</sub> to SRAS<sub>2</sub>. D)  The AD curve would shift from AD<sub>1</sub> to AD<sub>2</sub> at the same time that the SRAS curve would shift from SRAS<sub>1</sub> to SRAS<sub>2</sub>. E)  The AD curve would shift from AD<sub>2</sub> to AD<sub>1</sub>.

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Definitions:

Physical Count

The process of manually counting the actual inventory on hand at a certain period to verify the quantities listed in the accounting records.

Gross Profit Method

An inventory estimation technique that calculates the cost of goods sold based on gross margin.

Gross Profit

The financial metric representing the difference between revenue from sales and the cost of goods sold, before deducting overheads, payroll, taxation, and interest payments.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial health.

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