Contrary to the Behavior That Would Be Required to Eliminate

question 99

Multiple Choice

Contrary to the behavior that would be required to eliminate output gaps, many firms in the economy:

• A) intentionally set prices below equilibrium prices in order to create shortages.
• B) adjust their prices only periodically.
• C) have fully-flexible prices that change constantly.
• D) only change the amount of output they produce in the long run, not in the short run.

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Definitions:

Earnings Per Share

A measure of a company's profitability calculated by dividing net income by the number of outstanding shares.

Net Operating Income

Represents the amount of profit realized from a business's operations after subtracting all operating expenses from operating revenues.

Common Stock

A type of equity security that represents ownership in a corporation, with voting rights and potential dividends.

Return on Equity

A financial ratio that measures the profitability of a firm in relation to its equity, indicating how well a company uses investments to generate earnings growth.