In the Basic AD/AS Model, Which of the Following Is

question 76

Multiple Choice

In the basic AD/AS model, which of the following is a defining characteristic of the adjustment process that takes the economy from the short run to the long run?

• A)factor prices are assumed to respond to output gaps
• B)firms cannot operate near their normal capacity
• C)technology used in production is endogenous
• D)the level of potential output fluctuates with the price level
• E)factor supplies are assumed to be varying

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Definitions:

Income Summary Account

A temporary account used in accounting to transfer the sums of revenues and expenses at the end of an accounting period.

Dividends Declared Account

An account used to record the amount of dividends that a company's board of directors has decided to distribute to its shareholders.

Post-closing Trial Balance

A list of all accounts still open after closing entries are made, used to verify the equality of debits and credits.

Retained Earnings

The portion of net income that is kept by the company rather than distributed to shareholders in the form of dividends to be reinvested in the business or pay off debt.