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Starting from Potential Output, If Firms Become Less Optimistic About

question 30

Multiple Choice

Starting from potential output, if firms become less optimistic about the future and decide to decrease their investment in new capital, then this will generate a(n) ________ gap and inflation will ________.


Definitions:

Return on Investment

A financial metric measuring the profitability of an investment, calculated as net profit divided by the cost of the investment.

Responsibility Centers

Responsibility centers are parts of an organization treated as separate units for the purpose of assigning and evaluating financial performance.

Evaluating Performance

The process of assessing the effectiveness and efficiency of operations, employees, or processes.

Managers

Individuals responsible for planning, directing, and overseeing the operations and employees within an organization to achieve its objectives.

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