If Government Spending Increases Then, Given the Real Interest Rate

question 59

Multiple Choice

If government spending increases then, given the real interest rate,

• A) the demand for goods increases more than one-for-one.
• B) the demand for goods increases less than one-for-one.
• C) the demand for goods is unchanged, due to crowding out.
• D) the demand for goods increases one-for-one.
• E) the demand for goods doubles.

---

Definitions:

Direct Labor Costs

Expenses associated with the labor directly involved in producing a product or delivering a service.

Costing System

A method or procedure employed to collect, classify, and allocate costs to products, services, or job orders.

Job-Order Costing

An accounting method that assigns costs to specific production jobs or batches, making it possible to track the cost of each job individually.

Direct Labor Costs

Wages paid to workers directly involved in manufacturing a product or providing a service.