Consider the Global Recession That Began in Late 2008

question 70

Multiple Choice

Consider the global recession that began in late 2008.In terms of the AD/AS model,which of the following statements best describes the macroeconomic effect on Canada's economy?

• A)The AD curve shifted to the right due to reduced demand for Canadian exports,which created a recessionary gap.
• B)The AD curve shifted to the left due to reduced demand for Canadian exports,which created a recessionary output gap.
• C)The AS curve shifted to the right due to increased factor prices,which created a recessionary gap.
• D)The AS curve shifted to the left due to increased factor prices,which created a recessionary gap.
• E)Potential GDP fell,which reduced actual national income.

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Definitions:

Standard Cost

A predetermined cost for a product or service, based on expected material, labor, and overhead costs, used as a benchmark to control actual costs.

Materials Price Variance

The difference between the actual cost of materials used in production and the expected (or standard) cost, reflecting changes in material prices.

Materials Quantity Variance

The gap between the actual and expected quantities of materials used in production, with each difference multiplied by the standard unit cost.

Raw Materials Purchase

The acquisition of basic materials needed for the production of goods, a critical input in the manufacturing process.