The Long Run in Macroeconomic Analysis Is a Period

question 293

Multiple Choice

The long run in macroeconomic analysis is a period:

• A) in which wages and some other prices are sticky.
• B) in which prices and nominal wages are flexible.
• C) longer than one year.
• D) in which the capital stock is held constant.

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Definitions:

Flexible Budget

A budget designed to adapt according to variations in volume or activity levels.

Fixed Cost

Costs that remain constant in total regardless of changes in the level of activity or production volume, such as rent or salaries.

Spending Variance

The difference between the actual amount spent and the budgeted amount for a particular category or period.

Manufacturing Overhead

Indirect costs related to manufacturing that cannot be directly tied to a specific product, such as maintenance and factory utilities.