Related to the Economics in Practice on P

question 136

Multiple Choice

Related to the Economics in Practice on p. 558: A monsoon destroyed 80% of the Gregorian manufacturing base. The Gregorian government decided to use an expansionary fiscal policy to counter the effects of the monsoon on the economy. The use of the expansionary fiscal policy would have caused

• A) the price level to be lower and the output level to be higher than they would have been without the policy action.
• B) both the price level and the output level to be higher than they would have been without the policy action.
• C) both the price level and output level to be lower than what they would have been without the policy action.
• D) the price level to be higher and the output level to be lower than they would have been without the policy action.

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Definitions:

Favorable

A term used in accounting and finance to describe outcomes or variances that are better than anticipated, indicating a positive performance against the budget or forecast.

Unfavorable

A term used to describe a variance or outcome that results in a worse financial position than expected or budgeted.

Labor Rate Variance

The difference between the actual labor costs incurred and the expected (or standard) labor costs, often due to paying a higher or lower wage rate than planned.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (standard) variable overhead allocated based on activity levels.