Figure 11-5 -Refer to Figure 11-5. If the Economy Is at Point

question 96

Multiple Choice

Figure 11-5
-Refer to Figure 11-5. If the economy is at point b, the Federal Reserve can close the output gap by selling bonds. In the bond market,

• A) the supply curve shifts right, leading to a decrease in bond prices and an increase in interest rates.
• B) the demand curve shifts right, leading to an increase in bond prices and a decrease in interest rates.
• C) the supply curve shifts left, leading to an increase in bond prices and an increase in interest rates.
• D) the demand curve shifts left, leading to a decrease in bond prices and an increase in interest rates.

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Definitions:

Idle Capacity

Unused or underutilized production capacity within a manufacturing operation, often leading to increased costs without corresponding revenue.

Activity-Based Costing

A method of accounting that identifies the activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each.

Internal Decision-Making

The process within an organization by which decisions are made by its members or systems based on internal criteria, policies, and data.

Direct Materials Costs

The expenses for raw materials that are directly used in the production of a product.