Consider an Economy in Long- Run Equilibrium Where Factor Supply

question 43

Multiple Choice

Consider an economy in long- run equilibrium where factor supply is 2.5 million units, the factor utilization rate is 0.85 and a simple measure of productivity (GDP per factor employed) is $200. Now suppose that, other things being equal, the productivity measure rises to $210. The effect of this change will be

• A)an increase in this economy's potential output, and an adjustment back to its original level after factor prices have adjusted.
• B)a rightward shift of the aggregate supply curve, and an adjustment back to Y*.
• C)an inflationary gap caused by simultaneous rightward shifts of the aggregate demand and aggregate supply curves.
• D)an increase in this economy's potential output in the long run.
• E)a rightward shift of the aggregate demand curve due to the increased wealth of the private sector.

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Definitions:

Selection Decision

The process by which an employer evaluates and decides upon which candidates will be offered a job from a pool of applicants.

Utility Analysis

A quantitative method used to assess the economic value or impact of human resource interventions and decisions.

Internal Recruiting

The practice of filling job vacancies within a company using existing employees rather than hiring externally.

Higher-level Positions

Job roles that encompass more responsibility, authority, and usually offer higher pay, often accompanied by managerial or executive duties.