With a Cost Shock, a Large Decrease in Output Relative

question 142

Multiple Choice

With a cost shock, a large decrease in output relative to the increase in the price level would occur if the ________ curve is relatively ________.

• A) AS; flat
• B) AS; steep
• C) AD; flat
• D) AD; steep

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Definitions:

GAAP

Stands for Generally Accepted Accounting Principles, which are a common set of accounting rules and standards used in the United States for financial reporting.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is gaining global acceptance.

Deferred Taxes

Taxes applicable to income that has been accrued but not yet paid, due to differences between accounting and tax legislation.

Installment Sales

A method of sale where the buyer makes payments towards the total sale price in installments over time, while the seller recognizes revenue as payments are received.