During the Course of a Week, McDonald's Has Enough Time

question 1

Multiple Choice

During the course of a week, McDonald's has enough time to hire or layoff workers, but it does not have enough time to expand its kitchen or add an additional seating area. In this situation, McDonald's:

• A) has no fixed costs.
• B) is in the short run.
• C) suffers an economic loss.
• D) earns a large profit.

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Definitions:

Potential Output Level

The highest level of real gross domestic product (GDP) that can be sustained over the long term without increasing the rate of inflation.

Identity

The distinct characteristics, personality, or qualities that make an individual or group unique.

Quantity Theory of Money

A theory that relates the money supply to the price level and the rate of economic growth.

Money Supply

The sum of all financial assets, encompassing cash and deposits in banks, present within an economy at a given moment.