Which of the Following Is a Defining Assumption of the AD/AS

question 124

Multiple Choice

Which of the following is a defining assumption of the AD/AS macro model in the short run?

• A)factor supplies are assumed to be flexible
• B)technology used in production is endogenous and variable
• C)the level of potential output fluctuates with the price level
• D)factor prices are assumed to be exogenous
• E)firms cannot operate near their normal capacity

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Definitions:

Spreadsheet

A digital tool used for organizing, analyzing, and storing data in tabular form, consisting of rows and columns to facilitate calculations and management of information.

Indirect Method

A way of calculating cash flows from operating activities by starting with net income and adjusting for changes in non-cash accounts on the balance sheet.

Merchandise Inventories

Goods, either manufactured or purchased, held for sale in the regular course of business.

Direct Method

A cash flow statement approach that itemizes actual cash flows from operating activities, rather than adjusting net income.