Potential Output Will Decrease If

question 181

Multiple Choice

Potential output will decrease if

• A)there is an increase in the price level
• B)there is a decrease in the price level
• C)there is technological change that increases labor productivity
• D)workers choose shorter work schedules in order to enjoy more leisure time
• E)the nation's capital stock increases

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Definitions:

Modigliani-Miller Model

A theory on capital structure that suggests that under certain market conditions (no taxes, no transaction costs), the value of a firm is unaffected by how it is financed.

Restructuring

Restructuring involves modifying the structure or operations of a company, often including changes in financial policies, organizational setup, or business strategy, aimed at increasing profitability or addressing financial challenges.

Market Value

The estimated amount for which an asset or liability should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently, and without compulsion.

Required Rates Of Return

Required rates of return are the minimum returns investors expect to receive from an investment to compensate for its perceived risk.