Which of the Following Would Generally Cause Firms to Expand

question 187

Multiple Choice

Which of the following would generally cause firms to expand output in the short run?

• A) a proportional increase in the prices of goods and services and the costs of producing them
• B) higher profit margins as the result of an unexpected increase in the prices of goods and services
• C) an unexpected reduction in aggregate demand
• D) an increase in wages and the prices of other resources

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Definitions:

Times Interest Earned Ratio

A financial ratio that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes (EBIT) to its interest expenses.

Callable Bonds

A type of financial instrument that allows the issuer to buy them back prior to the expiration date, for a pre-determined price.

Bond Indenture

A legal contract specifying the terms and conditions under which a bond is issued, including interest payments and repayment at maturity.

Fiscal Year

A twelve-month period used for accounting and financial reporting purposes, which may or may not align with the calendar year.