All Else Being Equal, If Consumption Rises as a Share

question 88

Multiple Choice

All else being equal, if consumption rises as a share of GDP, then

• A)future consumption will fall.
• B)people must be saving more.
• C)there must have been an increase in GDP.
• D)people must have experienced an increase in wealth.
• E)there will be less available to consume in the future.

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Definitions:

Denominator Level

A term used in cost accounting to represent the base level or quantity used in calculating rates, such as in the determination of overhead rates or per-unit costs.

Fixed Overhead

Regular, consistent costs incurred by a business that are not affected by the level of goods or services produced, such as rent and salaries.

Budget Variance

The difference between the budgeted or planned amount of expenses or revenues, and the actual amount incurred or earned.

Predetermined Overhead Rate

A rate calculated before the period begins, used to allocate manufacturing overhead to products based on a specific activity base.