Which of the Following Are Demand-Based Capacity Levels? I Normal

question 100

Multiple Choice

Which of the following are demand-based capacity levels? I Normal capacity
II Budgeted capacity
III Practical capacity

• A) I and II only
• B) II and III only
• C) I and III only
• D) I, II, and III

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Definitions:

Potential Output

The maximum output an economy can produce without causing inflation when all resources are fully employed.

Aggregate Demand Curve

A curve that illustrates the total demand for all goods and services in an economy at various price levels, assuming all other factors remain constant.

Short-Run Aggregate Supply Curve

A curve depicting the relationship between the total supply of goods and services produced by a country and the price level for that output in the short term, taking some input prices as fixed.

Treasury Securities

Debt instruments issued by a government to finance its spending, offering a safe investment option with a guaranteed rate of return.