Why Is It Unlikely That Expansions Could Be Explained by a Decrease

question 27

Multiple Choice

Why is it unlikely that expansions could be explained by a decrease in labor demand in the classical model?

• A) It would be hard to say why productivity decreases.
• B) Productivity increases are too fast and variable to explain expansions.
• C) Productivity tends to improve at a constant and steady rate.
• D) Only unexplained spending changes can lead to changes in output and employment,not the other way around.
• E) Productivity improvements are rather slow.

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Definitions:

Accounts Receivables

Represents money owed to a company by its customers for goods or services delivered but not yet paid for.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated by dividing current assets by current liabilities.

Quick Ratio

A liquidity measure that indicates a company's ability to cover its short-term liabilities with its most liquid assets, without selling inventory.

Liquidity

The ease with which an asset, or security, can be converted into ready cash without affecting its market price.