Suppose That an Economy Produces 2,400 Units of Output, Employing

question 98

Multiple Choice

Suppose that an economy produces 2,400 units of output, employing the 60 units of input, and the price of the input is $30 per unit. All else equal, if the price of each unit of input decreased from $30
To $20, then productivity would

• A) increase from $40 to $90 and aggregate supply would decrease.
• B) increase from $50 to $60 and aggregate supply would decrease.
• C) increase from $60 to $70 and aggregate supply would increase.
• D) remain unchanged but aggregate supply would increase.

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Definitions:

Operating Activities

Business activities related to the day-to-day functions of a company, involving revenues and expenses.

Indirect Method

An approach used in cash flow statement preparation that adjusts net income for changes in balance sheet accounts to derive operating cash flows.

Operating Activities

Activities that relate to the primary operations of a company, such as sales, supply, production, and administrative services.

Salaries

Regular payments made to employees for their services, typically expressed as an annual sum but paid in regular installments.