As the Macro Economy Adjusts from the Short Run to the Long

question 59

Multiple Choice

As the macro economy adjusts from the short run to the long run,

• A)wages and other factor prices remain constant.
• B)wages and other factor prices adjust to close output gaps.
• C)aggregate supply shocks cause deviations from potential output.
• D)aggregate demand shocks cause deviations from potential output.
• E)potential output is adjusting to close inflationary or recessionary gaps.

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Definitions:

DLH

The hours of work performed by workers directly involved in the manufacturing process, serving as a basis for allocating labor costs.

Volume Variance

The difference between the expected volume of production or sales and the actual volume, affecting costs or revenues.

Variable Overhead Efficiency Variance

A calculation used to measure the efficiency with which a firm uses its variable overhead resources, based on the difference between actual and expected usage.

Unfavorable

A term describing outcomes that are worse than expected or budgeted, often used in financial and operational analysis.