Consider the Equation GDP = F × (F_E/F)× (GDP/F_E)

Multiple Choice

Consider the equation GDP = F × (F_E/F) × (GDP/F_E) . If the economy enters a recessionary gap because of a negative aggregate demand shock, the equation changes in which of the following ways?

A) the value of F_E/F falls as workers are laid off and equipment is used less intensively.
B) the value of F_E/F rises as the rate of unemployment rises.
C) the value of GDP/F_E falls as workers are laid off and equipment is used less intensively.
D) there are no short- run changes in this case.
E) the value of F falls as the rate of unemployment rises.