In the Short-Run Aggregate Demand Model, Firms Are Generally Assumed

question 24

Multiple Choice

In the short-run aggregate demand model, firms are generally assumed to

• A) set production goals to enhance worker productivity.
• B) respond to changes in demand by adjusting prices until markets clear.
• C) operate at capacity to maximize profits in the long run.
• D) adjust production levels in response to changes in demand.
• E) adjust both prices and production to increase short-run profits.

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