We Distinguish Between the Long-Run Aggregate Supply Curve and the Short-Run

question 364

Multiple Choice

We distinguish between the long-run aggregate supply curve and the short-run aggregate supply curve. In the long run

• A) the aggregate supply curve is horizontal while in the short run it is upward sloping.
• B) real GDP equals potential GDP.
• C) the price level is constant but in the short run it fluctuates.
• D) technology is fixed but not in the short run.

Understand the implications of changes in EBIT on EPS, given a company's capital structure.

Assess the impact of sales variations on operating income using the concept of operating leverage.

Identify the factors influencing a firm's return on capital employed (ROCE).

Analyze how capital restructuring impacts a firm's value and leverage ratios according to the Modigliani-Miller model.

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