If a Contractionary Gap Exists and Resource Prices Are Not

question 80

Multiple Choice

If a contractionary gap exists and resource prices are not flexible downward,the short-run aggregate supply curve will

• A)shift leftward to return the economy to its potential output
• B)shift rightward to return the economy to its potential output
• C)not shift leftward to return the economy to its potential output
• D)not shift rightward to return the economy to its potential output
• E)become the long-run aggregate supply curve

Recognize the role of government in correcting market failures and providing public goods and services.

Identify the factors that contribute to government failures and their implications.

Understand the concept and importance of the "invisible hand" in market economies.

Grasp the significance of the price mechanism in allocating resources efficiently.

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Definitions:

Financial Break-even

The point at which total revenues are equal to total operating expenses and financial costs, meaning the company makes no profit but also incurs no loss.

Payback Period

The amount of time required for an investment to generate cash flows to recover its initial cost.

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales activity, such as rent, salaries, and insurance.

Operating Cash Flow

The cash a company generates from its normal business operations, excluding financing and investing activities.