According to Classical Macroeconomic Theory

question 163

Multiple Choice

According to classical macroeconomic theory,

• A)the price level is sticky in the short run and it plays only a minor role in the short-run adjustment process.
• B)for any given level of output,the interest rate adjusts to balance the supply of,and demand for,money.
• C)output is determined by the supplies of capital and labor and the available production technology.
• D)All of the above are correct.

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Definitions:

Variable Cost

Costs that change in proportion to the level of activity or volume of production in a business.

Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance expenses.

Depreciation

Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life.

Contribution Margin

The amount by which sales revenue exceeds variable costs, used to cover fixed costs and generate profit.