The Level of Aggregate Output Is Determined in the Short

question 51

Multiple Choice

The level of aggregate output is determined in the short run by but in the long run by the level of .

• A)the output gap; factor productivity
• B)the AD and AS curves; Y*
• C)the AS curve; potential output
• D)the AD curve; interest rates
• E)the AD and AS curves; factor utilization

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Definitions:

Net Fixed Assets

The value of a company's property, plant, and equipment minus depreciation, representing the actual worth of these assets to the business.

Total Assets

The sum of all current and long-term assets owned by a company, reflecting the total resources at its disposal.

Internal Growth Rate

The maximum growth rate a company can achieve with its existing assets without having to finance growth with external equity or debt.

Retention Ratio

The portion of net income that is retained by a company instead of being paid out as dividends to shareholders, usually expressed as a percentage.