In the Short Run, the Aggregate Supply Curve Is Relatively

question 34

Multiple Choice

In the short run, the aggregate supply curve is relatively flat because at any point in time:

• A) firms are assumed to supply all the output demanded with relatively small changes in prices.
• B) the labor costs faced by firms are slower to adjust than final prices.
• C) technology advances faster than production costs.
• D) firms can not face increases in the output demanded without experiencing small reductions in profits.

---

Definitions:

Profitability Index

A financial metric that compares the present value of future cash flows from an investment to its initial cost, used to evaluate investment attractiveness.

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time, used in capital budgeting.

Capital Rationing

A strategic financial approach where a company restricts its spending on new projects due to limited resources.

Net Present Value

A performance indicator for assessing an investment's profit, derived by taking away the current value of cash disbursements from the current value of cash incomes during a specific period.