For the Economy as a Whole, Changes in the Factor-

question 56

Multiple Choice

For the economy as a whole, changes in the factor- utilization rate are associated with short- run fluctuations in output because

• A)it is cheaper for firms to let their inventories accumulate than to employ more workers.
• B)factor prices can only fully adjust in the long run.
• C)firms cannot change their prices in the short run.
• D)potential output is affected by the factor- utilization rate in the short run.
• E)the short- run fluctuations in factor supplies and productivity cancel each other out.

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Definitions:

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