The appropriate section in the statement of cash flows for reporting the cash payment of wages is: Operating activities
Option A is correct .
The statement of cash flow has three sections:a) Operating activities, which are the funds received and paid for in the normal course of business;
b) Investing activities, which are the funds received and paid for long-term investments or non-current assets like property; and
c) Financing activities, which are the funds received and paid for the issuance of common stock, bonds, and dividends.
With an example, what are operating activities in cash flow?The term "cash flow from operating activities" (CFO) refers to the amount of money a company receives from its regular, ongoing operations, such as manufacturing and selling goods or providing a service to customers. The entirety of a company's ongoing efforts to bring its goods and services to market are referred to as its operating activities. Non-operating activities are one-time events that aren't part of the regular, core business but could affect the company's revenues, expenses, or cash flow.
Question is incomplete,missing part is given below :
The appropriate section in the statement of cash flows for reporting the cash payment of wages is:
A. Operating activities.
B.Financing activities.
C. Investing activities.
D.Schedule of noncash investing or financing activity.
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What are the goals of a free market economy?
The goal of a free market economy is to provide an environment that encourages and rewards innovation, growth, and wealth creation.
A free market economy is an economic system in which the market is allowed to determine prices, production, and distribution of goods and services based on the laws of supply and demand.
This system is designed to promote competition, reduce government interference, and increase the efficiency of resource allocation and production. The goal of a free market economy is to provide an environment that encourages and rewards innovation, growth, and wealth creation.
This system also encourages individuals to take responsibility for their own economic decisions, resulting in increased economic freedom. Ultimately, a free market economy seeks to maximize the welfare of individuals, businesses, and the overall economy.
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An employer hiring in a competitive labor market should hire additional labor as long as A.MC exceeds MR. B.the MRP exceeds the wage rate. C.the wage rate is less than MP. D.average product exceeds MP
As long as the MRP exceeds the wage rate, a competitive firm should hire more workers.
The sum given to employees is what is meant by a wage rate. One of the main subjects studied in human resource studies is this. Either the quantity of production hours or workplace productivity will determine it. The study of wage rates is known as wage rate economics. It is a crucial element in economics because both microeconomics and macroeconomics depend heavily on average worker pay. In other words, it influences governmental policy as well as consumer behavior. The wage rate, which is defined as the pay strategy for any individual or group of employees, determines both the expense and the revenue of human resources.
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The assessed value of Sidney's home is $350,000 but the home was recently appraised at $225,000. As a result, Sidney believes her tax bill is way too high. What option does Sidney have
Sidney can file a complaint with the local board of assessment review.
A complaint is a formal legal document that sets forth the facts and legal grounds that the filing party or parties feel are adequate to sustain a claim against the party or parties against whom the claim is lodged, entitling the plaintiff to a remedy.
The same name is used for the same pleading under civil court rules in states that have absorbed the Federal Rules of Civil Procedure. This written document comprises the plaintiff's charges against the defence, the particular laws broken, the events that led to the disagreement, and any demands for justice made by the plaintiff.
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Why is insurance so important in today's society?
Life insurance is significant because it provides financial stability to the policyholder's family in the event of the policyholder's untimely death.
Anyone looking to protect their family, possessions, and themselves from financial risk or losses will benefit from insurance plans. Insurance plans will assist you in covering the costs of unexpected medical expenses, hospital stays, contracting illnesses and their associated treatments, and future medical care needs.
Life insurance can help the policyholder's family maintain their financial independence so they are not forced to make lifestyle compromises.
At its most basic level, insurance acts as a protective safety net that enables businesses to take on more risky and lucrative ventures than they otherwise might.
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What is the ratio of purple flowers to white flowers ?: 1?
Purple flowers to white blossoms are split in a ratio of 3:1.
The alpha factor (), which is the ratio of a transistor's collector and emitter currents, is always less than one (between 0.5 and 1). Current gain (= Ic/Ib), often known as the ratio of its collector and base currents, is always larger than 1. An alternate formula for calculating the factor is = /(+1) = 0.996/ 0.992=1 = /(+1).=1/1+1=1/2=0.5. A proportion also exists when two ratios are equivalent. A ratio in mathematics displays how often one number occurs in another. In a fruit plate, for instance, the ratio of oranges to lemons would be eight to six . This demonstrates that the tweet is being criticized and that some people believe its content to be inappropriate
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6 main emotional road blocks james L adams identified as preventing us from creativity
James L. Adams identified six main emotional roadblocks that prevent creativity. These roadblocks are fear of failure, fear of the unknown, self-doubt, low self-esteem, pessimism, and a lack of motivation.
Fear of failure can be a powerful roadblock to creativity as it can limit our willingness to try something new or take risks. Fear of the unknown can also prevent us from being creative, as we may be unsure of what to expect.
Self-doubt can keep us from being creative as we may not believe in our own abilities.
Low self-esteem can lead to a lack of confidence, which can keep us from pursuing creative activities.
Pessimism can prevent us from seeing the potential of our ideas, as we may expect them to fail.
Finally, a lack of motivation can be an obstacle to creativity, as we may not feel inspired to create. By recognizing and overcoming these emotional roadblocks, we can open ourselves up to greater creativity.
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Jewelry is a small but rapidly growing Internet retailer. A popular product is its standard 14k white gold diamond anniversary ring (1/4 carat total weight) that retails for $250. Prices are stable, so P = MR = $250 in this market. Total cost relations for this product are: TC = 3,250,000 + 70Q + 0.002Q2 Calculate the output level that will maximize profit.
The output level of 42,500 units will maximize the profit.
To calculate the output level that will maximize profit, we can use the profit maximization equation:
π = TR - TC
Where:
π = profit
TR = total revenue
TC = total cost
To find the profit-maximizing output level, we need to first find the relationship between output level (Q) and total revenue (TR). In this case, we know that the price (P) is stable at $250, so we can find total revenue by multiplying the price by the quantity:
TR = P * Q
TR = $250 * Q
Next, we need to use the total cost equation provided:
TC = 3,250,000 + 70Q + 0.002Q2
To find the profit at different output levels, we can substitute the TR and TC equations into the profit equation:
π = TR - TC
π = ($250 * Q) - (3,250,000 + 70Q + 0.002Q2)
To find the output level that maximizes profit, we will find the derivative of the profit equation and set it equal to zero.
dπ/dQ = 250 - 70 - 0.004Q = 0
Solving for Q:
0.004Q = 170
Q = 42,500
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What are the pros and cons of a free enterprise system?
Free enterprise works by allowing people to do what they make stylishly and trade for the rest. Competition is a driving force of free enterprise, performing with lesser effectiveness and lower prices for the consumer.
Countries embracing free request principles profit from an advanced standard of living. Uneven profitable growth occasionally, growth is fast, and other times it's slow. Growing gaps between rich and poor rich feel like getting richer, and the poor feel like getting poorer. Large “force-side” tendencies enterprises will combine and reduce competition.
It has to break a specific problem the business has. One of the major benefits of free enterprise operations is that it improves the company's overall effectiveness. Thanks to a better information workflow, simpler IT structure, process robotization, data storehouse, and standardization.
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U. S. Currency is part of.
a. M1 only
b. M2 only
c. M3 only
d. M1, M2, and M3
It is U.S. government policy that all designs of U.S currency remain legal tender, regardless of when they were issued.
What are US dollars classified as?The USD (United States dollar) is the official currency of the United States of America. The United States dollar, or U.S. dollar, is made up of 100 cents. It is represented by the symbol $ or US$ to differentiate it from other dollar-based currencies.The U.S. dollar is considered a benchmark currency and is the most used currency in transactions across the world. In addition, it is used as the official currency in many territories outside of the U.S., while many others use it alongside their own as an unofficial currency.The U.S. dollar is considered a benchmark currency and is the most used currency in transactions across the world. In addition, it is used as the official currency in many territories outside of the U.S., while many others use it alongside their own as an unofficial currency.To learn more about currency refer to:
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You are a project manager for Johnson Keyboards, Inc. Your organization has adapted the PMBOK Guide as a standard tool for how projects should operate, and you are involved in shaping the standardization for all future projects. In light of this information, what is the recommended course of action for the processes and procedures in the PMBOK Guide
The recommended course of action is that the PMBOK guide is not required by all projects.
The Project Management Body of Knowledge (PMBOK), published by the Project Management Institute (PMI), is a book that lists accepted terms, best practices, and procedural rules for project management. Project management is the practice of starting, planning, carrying out, controlling, and wrapping up a team's work to accomplish specific goals and success standards.
It takes the application of information, skills, tools, and processes to project activities in order to meet the project's requirements. In the given case, the project manager for Johnson Keyboards, Inc must understand that not all processes and procedures in the PMBOK guide are required on all projects. Thus, further decisions on the project must be taken on this basis only.
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For which contract type is cost overrun from the agreed upon set budgeted cost paid by buyer ONLY?
Reimbursable costs (or Cost Plus) Cost reimbursable (CR) contracts include a compensation or incentive for meeting or surpassing project goals together with payment based on the sellers' actual expenses. The customer is therefore exposed to the greatest cost risk.
Which of the following contract types has the highest risk of cost overruns?Due of the uncertainty surrounding the final expenses, cost-reimbursable contracts have the highest risk of cost overrun and non-performance.
In what kind of contract is the contractor put at risk for cost overruns?The MGP contract combines elements of cost-plus and fixed-fee contracts. In this case, a price cap with a cost-plus structure is applied. Unlike fixed price and cost-plus contracts, which typically transfer the risk of cost overruns to the owner and contractor, this arrangement divides the risk equally.
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What is economic equality answer in one word?
According to the question, equality is the answer of economic equality a in one word
What is the equality?
Being equal in position, rights, and opportunity is the state of equality. It is the idea that all people should have the same access to social, economic, and political resources, regardless of their race, gender, ethnicity, sexual orientation, or any other personal characteristics. Equality ensures that everyone is treated fairly and with respect. Equality allows for individuals to make the most of their talents and strengths, and it promotes diversity and inclusion. Equality is the essential to achieving social justice and creating a more equitable society.
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What is the most important factor you usually consider when buying something?
The most important and first on this list is the profitable Factor. This bone is the main foundation of any purchasing decision. The reason is simple people can not buy what they can not go.
The need for a product also does not play a part then, but affordability is the most important thing. Price. Before you buy anything, take a good look at the cost. You might be considering buying a high-quality tinge or CBD product.
However, if that is the case, you are willing to spend a little further plutocrat to get what you know is a great item. A client is girdled by four profitable factors when considering any purchase the product, the price, the creation and the deals channel.
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spreadsheets are a common tool for cost estimating, cost budgeting, and cost control.
b It must be a definitive estimate and as accurate as possible.
Program Evaluation and Review Technique (PERT)
The most in many instances used method in three-point estimation approach makes use of the Program Evaluation and Review Technique (PERT) model.
Three kinds of estimates are determined earlier than using their common to arrive at the common fee estimate
What are the four 4 tools and methods to estimate charges in the assignment management?Image result
The 4 important analytical techniques or fee estimation methods used to strengthen price estimates for acquisition programs are Analogy, Parametric (Statistical), Engineering (Bottoms Up), and Actual Costs.
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Banks in the collection process that are not the depository or payer bank are called ________ banks.
When a consumer deposits money into a bank, a relationship is established; the consumer is the creditor and the credit union is the debtor a section of the UCC outlining the specifications .
A non-depository bank: what is it?An organization that doesn't accept deposits is known as a non-depository institution. An experienced FDIC-insured bank might, for instance, have a bank or office that handles only business lending transactions and doesn't take deposits or make payments.
An uncleared bank account is what?Customers' Call Account and Commercial Undesignated Clients. With this account, you can keep money belonging to numerous clients in a single shared account. It is appropriate for businesses run by professionals like accountants, lawyers, and insurance brokers.
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The savings, interests, and other assets a borrower has that can be used to pay back the loan are collectively known as:
Capital refers to all the resources a borrower has that can be utilized to repay the loan, including savings, interest, and other assets.
A loan occurs when one or more individuals, businesses, or other entities lend money to additional individuals, businesses, or other entities. The recipient frequently has to pay interest charges until the debt is repaid in addition to the money borrowed. The principal amount owed, the interest rate charged by the lender, and the payment due date are frequently included in the documentation establishing the debt. The subject asset will temporarily be split between the lender and the borrower as part of the loan. The payment of interest is what prompts the lender to approve the loan. A formal loan upholds all of these standards and conditions.
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Don uses one hour each week to perform certain tasks, including ______, as part of his personal financial system.
Don spends an hour each week on a number of tasks as part of her financial and personal routine, including settling any past-due bills or payments.
What does an accounting bill mean?An forensic accounting document that details the price a customer must pay for a good or service is referred to as a "bill." It is also regarded as a reminder for payments. It before payment is delivered, a bill is issued, and it's used once and right away.
Is paying a bill a cost?A bill is technically an expense. However, both do have two distinct meanings in QuickBooks. A bill is cash that your company owes but will reimburse later. Any money spent by your company at the moment of a purchase is considered an expense.
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Some people argue that government should not be so involved in consumer protection. What are some arguments for and against this opinion?
Markets function properly when consumers and corporations are both protected. Consumers must have access to reliable, unbiased information about the goods and services they choose to buy.
What do you mean by a consumer?A consumer is a person or a group that is not directly involved in entrepreneurial or business operations and who intends to order or uses purchased items, products, or services primarily for personal, social, family, or household needs.
The phrase is most frequently used to describe someone who makes purchases for their own use. A consumer in an economy purchases goods or services primarily for personal use rather than for resale or for commercial objectives.
The price that consumers pay for the goods or services is followed by consumption. As a result, consumers are an essential component of any economy and play a crucial role in the economic system of a capitalist society.
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Which of the following is not one of the phases of product design and development? 11. Specify product specifications 12. Conduct market test 13. Perform applied research. 14. Conduct design review. 15. Specify process specifications
Perform applied research is not one of the phases of product design and development.
What is Perform applied research?Identifying an issue that occurs in the actual world is typically where Perform applied research begins. A remedy is then sought after by applied psychologists through study.
Psychology might vary depending on a number of variables what kind of study is used. The particulars of the circumstance and the type of issue psychologists are attempting to resolve are included in this.
To see the issue as it manifests in the real world, researchers may choose to use naturalistic observation.
Once the cause of the issue has been identified, experiments may be carried out to examine potential fixes. Perform applied research may be difficulties while performing applied psychology research, just as there may be with any other type of research.
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Order the following businesses from the least to the greatest amount of monopoly power.
1.) vegetable stands at a local farmers’ market
2.) gas stations in a large town
3.) restaurants in a big city
4.) cable television in an area where there is a single provider
(Firms that have something unique to sell have a high degree of monopoly power (price-setting ability) because there are no competitors for their good or service.)
1. vegetable stands at a very large local farmers' market. 3. restaurants in a small town. 4. cable television in an area where there is a single provider 2. gas stations in a large town.
Farmers can sell their products directly to consumers at a farmers' market, which is a physical retail space. Farmers' markets can be held inside or outside and often have booths, tables, or stands where local farmers can sell their produce, live plants and animals, and occasionally prepared foods and beverages. Farmers' markets are commonplace all over the world and are a reflection of the economics and culture there. The market's size can range from a handful of stalls to several city blocks. They are typically less strictly regulated than produce retailers because of the nature of their business. They are different from public markets, which are frequently housed in permanent structures, open all year round, and feature a variety of non-farmer/non-producer vendors, packaged goods, and non-food products.
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The UCC imposes on merchants Question 10 options: the predominant-factor test. certain special business standards. a relatively high degree of commercial expertise. the business of buying or selling particular goods.
The UCC imposes on merchants certain special business standards.
The Uniform Commercial Code, sometimes known as the UCC, is a system of laws that governs contracts and transactions, primarily for the banking sector and for people or corporations doing business outside of their home states. Checks, draughts, letters of credit, investment securities, bank deposits, and sales of products are all subject to UCC regulation, but real estate is not. The UCC frequently considers both merchants' and non-merchants' knowledge. Because consumers are inclined to seek out experienced sellers, the UCC believes that merchants have a little edge over non-merchants when supplying goods or services. As a result, the UCC sets higher expectations for business conduct for merchants than for non-merchants.
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In a manufacturing business, which of the following transforms finished goods into cash?
A)sales process
B)manufacturing process
C)inbound logistics
D)warehouse operations
E)outbound logistics
In a manufacturing business, sales process transforms finished goods into cash.so option A is correct.
What what is a sales process?A sales process is a series of reiterable stages that a salesperson follows to move a potential customer from the initial stage of awareness to a closed deal. Additionally, elite sellers invest, on average, 6 hours every week in locating and analyzing their prospects. The strategy your business uses to sell clients on your good or service is called the sales process, commonly referred to as a sales cycle. From the initial contact with a lead through the successful sale, there are several phases involved. Creating a relationship with a new person is comparable to the sales process.
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What would be the appropriate fiscal policy response to this situation if the primary concern of the government were to maintain economic growth
The use of taxation and expenditure by the government to affect the economy is known as fiscal policy. Fiscal policy is often used by governments to encourage robust,
fiscal policy long-term growth and to lower poverty. During the recent global economic crisis, when governments intervened to stabilize financial institutions, spur development, and lessen the impact of the crisis on vulnerable individuals, the function and goals of fiscal policy rose to prominence. The leaders of the Group of 20 industrial and emerging market nations said that they were engaging in "unprecedented and concerted budgetary growth" in the communiqué that followed their summit in London in April 2009. The term "fiscal expansion" was used. moreover,
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Which of the following statements is true about the righteous moralist approach to ethics? a. The righteous moralist approach is typically associated with managers from developed nations. b. The righteous moralist approach states that an action is judged desirable if it leads to the best possible balance of good consequences over bad consequences. c. The righteous moralist approach states that the only social responsibility of businesses is to increase profits. d. The righteous moralist approach implicitly rejects the idea that universal notions of morality transcend different cultures
The following assertion is true: (A) Managers from industrialized countries are frequently identified with the righteous moralist approach to ethics.
An upright moralist contends that a multinational's home country's ethical standards are the ones that businesses should adhere to abroad. Managers from industrialized countries are frequently thought to use this strategy. The idea that domestic norms of ethics are the best ones for businesses to adopt and put into effect abroad is known as righteous moralism.
Moral growth, individual values, family influences, peer influences, and life experiences are the personal variables that shape a person's ethical standards. There are three schools of ethics: deontological or duty-based ethics, consequentialist ethics, and virtue ethics. Each method offers a unique way to comprehend ethics.
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How much did John make in wages in the 2014 tax year? (assuming this was John's only job) A.) $48,119.00 B.) $31,878.71 C.) $42,417.88 D.) I do not know
John receives $31,878.71 in pay during the 2014 tax year. The right answer is A.
What is total income for tax purposes?Your gross income from all sources less particular deductions like costs, allowances, and reliefs equals your total income. The income of your spouse or civil partner is included in your total income if you are married or in a civil partnership and are being assessed jointly.
Wages are the major factor maintaining rising living standards. Living expenditures are an important benchmark in collective bargaining over pay and are a consistent and major source of demand from employees for greater minimum salaries, particularly during inflationary periods.
Thus, option A is the best choice.
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How big of a loan can I get with a 750 credit score?
With a credit score of 750, you can borrow $50,000 to $100,000 or more. In addition to your credit score, other factors such as your salary, work status, the sort of loan you receive, and even the lender, will affect the precise amount of money you will receive.
What makes it possible?
Because credit scoring techniques do not support it, a credit score of 1,000 is not feasible. According to Experian, some credit scoring techniques can produce scores as high as 900 or 950, however these are institution-specific ratings that are only applied in that sector.To be eligible for a $1,000 personal loan, you probably need a credit score of at least 580. If a borrower has sufficient income to cover the loan's monthly payments, the majority of lenders who offer personal loans of $1,000 or more accept them, even if their credit is poor or better.Generally speaking, you need a credit score of at least 620 to be qualified for a loan to buy a property. Most lenders require that low of a credit score.To know more about credit score here
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What interest rate is implicit in a $1,000 par value zero-coupon bond that matures in 8 years if the current price is $520.
The concept here is Zero-coupon bonds, a bond in which the face value is repaid at the time of maturity. The answer is, 8.51%.
Zero coupon bonds are bonds that pay no interest throughout their life. Unlike ordinary bonds, it does not make periodic interest payments and has no so-called coupons, hence the term zero coupon bond.
When the bond reaches maturity, its investor receives its par value. Given:
maturity - 8 years
face value - $1,000
current value - $ 520
Calculation of YTM:
YTM = (face value / current bond price) ^(1/maturity) - 1
YTM = (1000/520) ^(1/8) -1
YTM = (1.9230)^0.1250 -1
YTM = 1.0851 -1
YTM = 0.0851 or 8.51%
We can conclude by saying that, the interest rate of a Zero-coupon bond will be 8.51%.
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End of Chapter Problem Suppose that the economy is currently at potential output. Also suppose that you are an economic policy maker, and that a college economics student asks you to rank, if possible, your most preferred to least preferred type of shock: positive demand shock, negative demand shock, positive supply shock, negative supply shock. How would you rank them
Currently, economic output is at its maximum level. A demand shock is a rapid, unanticipated incident that sharply alters the demand for a good or service, typically only momentarily.
What is a negative supply shock?It refers to a change in supply which resulted to a decreases output causing prices to increase. Among other supply shock, this is least preferred type of supply shock by an economic policy maker. Because consumers are prepared to pay less because they want to consume less as a result of the shock, transaction prices fall. Because providers are ready to create less when prices fall, the amount that is supplied and consumed declines. Negative shocks lead to lower productivity and more unemployment. Positive shocks boost output and lower the unemployment rate. Nevertheless, whether the shock was a supply shock or a demand shock will determine the impact on inflation. In the short term, a supply shock that is positive throughout the entire economy will move the aggregate supply curve to the right, raising output and bringing down prices.
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Management has determined that your project must be completed by June 16. This date is an input to your planning process group and is considered what?
This date is an input to your planning process group and is considered Constraint and Organizational process asset.
Assets are any resources that a company or other economic entity owns or has control over in financial accounting. It encompasses anything that has the potential to generate gains in the economy. The ownership value of an asset is represented by its cash-convertible value. A company's assets are valued in dollars and are listed on its balance sheet. Money and other assets that belong to a person or a company are covered. Both tangible and intangible assets may be categorised into primary asset groups. Different subcategories of tangible assets exist, including current assets and fixed assets. While fixed assets are things like real estate, buildings, and equipment, current assets are things like cash, inventory, and accounts receivable.
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Aggregate Demand and Aggregate Supply - End of Chapter Problem Suppose an economy is in its long-run macroeconomic equilibrium when an oil shock shifts the short-run aggregate supply curve to the left resulting in a recessionary gap. a. How do the aggregate price level and aggregate output change in the short run as a result of the oil shock?
As a result of the oil shock, the aggregate price level ____ and the aggregate output___ This phenomenon is known as ____
a) The short-run aggregate supply curve is left-shifted in response to an oil shock. The decline in overall supply drives up prices and boosts unemployment. High unemployment accompanies high inflation in the economy. Stagflation is the name for this circumstance. The oil shock causes an increase in overall prices and a drop in overall output. Stagflation is the name given to this occurrence.
b.1) The government may implement an expansionary fiscal or monetary policy to offset the supply shock. The expansionary monetary or fiscal policy causes a rightward shift in the aggregate demand curve. This results in full employment and a rise in real GDP.
With real GDP at Yf and prices at PL, the aforementioned figure demonstrates that the economy is in long-term equilibrium. The short-run supply curve from SRAS to SAS1 moves to the left due to the negative supply shock. As a result, real GDP shrank to Y1 and prices rose to PL1. The negative output gap results in high prices and significant unemployment. As a result, the economy experiences both inflation and unemployment at the same time, which is referred to as stagflation.
The government conducts an expansionary fiscal or monetary policy to counter the effects of a supply shock. Such a measure causes the aggregate demand curve to change from AD to AD1 to the right. While the price level rose from PL1 to PL2, the actual GDP climbed to Yf.
b.2) The government uses a contractionary fiscal or monetary policy to lower the level of prices. A policy like this causes AD1 AD's aggregate demand curve to shift to the left. Real GDP fell from Yf to Y1, whereas the price level fell from PL2 to PL1.
The government can employ expansionary fiscal or monetary policy to return the real GDP to potential output. The government can implement contractionary fiscal or monetary policies to return the overall price level to its initial value.
c) The twin objectives of policymakers are to maintain price stability and full employment. However, a negative supply shock raises prices and unemployment. The price level rises as the unemployment rate declines. As prices are coming down, unemployment is rising.
Therefore, the challenge facing policymakers in the event of a negative supply shock is that they are unable to simultaneously attain price stability and full employment.
It is unable to attain both its twin objectives of price stability and full employment at once.
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The complete question is:
Aggregate Demand and Aggregate Supply - End of Chapter Problem Suppose an economy is in its long-run macroeconomic equilibrium when an oil shock shifts the short-run aggregate supply curve to the left resulting in a recessionary gap. a. How do the aggregate price level and aggregate output change in the short run as a result of the oil shock?
a) As a result of the oil shock, the aggregate price level ____ and the aggregate output___ This phenomenon is known as ____
b. What fiscal or monetary policies can the government use to address the effects of the supply shock? Use a diagram that shows the effect of policies chosen to address the change in real GDP. Use another diagram to show the effect of policies chosen to address the change in the aggregate price level.
To bring the real GDP back to potential output, the government can use fiscal or monetary policy. (contract/ expansion)
To bring the aggregate price level back to its original level, the government fiscal or monetary policies. (expansionary/ contractionary)
c. Why do supply shocks present a dilemma for government policymakers?
1. If the government reduces inflation, unemployment worsens further.
2. Policies used to alleviate one problem work by worsening the other one.
3. If the government reduces unemployment, the price level increases further.
4. It cannot simultaneously achieve its twin goals of price stability and full employment.