When demand for a firm's product decreases, the firm can take a number of steps to adjust costs and quantities supplied to the market. Some are listed below. Which actions are short run and which are long run? Explain your reasoning
a. Layoff 25 percent of the firm's existing employees.
b. Declare bankruptcy and sell all of the firm's plant and equipment.
c. Require management personnel to take a significant cut in pay.
d. Furlough employees for 3 days each month.
e. Move to a smaller production facility.
Options a, c, and d are all short-run options because they all involve changes in variable inputs only (quantity of labor and labor costs). Options b and e are long-run options because they involve changes in fixed factors, i.e., plant and equipment.
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Decreases in autonomous spending have a contractionary effect and make ________ levels of real income consistent with a given interest rate
A) lower B) higher C) constant D) none of the above.
The expectations theory and the segmented markets theory do not explain the facts very well, but they provide the groundwork for the most widely accepted theory of the term structure of interest rates
A) the Keynesian theory. B) the separable markets theory. C) the liquidity premium theory. D) the asset market approach.
In the 19th century, the federal government:
a. allocated funds to help build steamboats. b. passed laws requiring steamboat boiler inspections. c. required steamboat captains to undergo training in order to receive an operating license. d. regulated the fees that steamboats could charge for carrying freight. e. All of the above.
Refer to the diagram. If the price level rises above P 1 because of an increase in aggregate demand, the:
A. economy will move up along curve B and output will temporarily increase.
B. long-run aggregate supply curve C will shift upward.
C. short-run aggregate supply curve B will automatically shift to the right.
D. economy's output first will decline, then increase, and finally return to Q 1.