If Firms Are Producing Below Capacity

question 5

Multiple Choice

If firms are producing below capacity,

• A) it is not possible to increase output
• B) they will charge higher prices to maintain profit levels
• C) resources, especially labor, are in short supply
• D) output can be expanded by hiring extra workers
• E) an increase in aggregate demand will force firms into bankruptcy

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Definitions:

Trade-In

A transaction where the value of a used item is applied towards the purchase of a new item.

Effective Rate

A comprehensive interest rate that represents the full cost of borrowing or the full return on investment, including compounding.

Monthly Rate

A set interest or cost expressed as a monthly percentage or fee.

Loan Payment Schedule

A detailed plan listing individual payment amounts and dates throughout the term of a loan, showing both principal and interest components.