Scenario 14-1 The Economy Is in Long-Run Equilibrium. Suddenly, Due to Improved

question 250

Multiple Choice

Scenario 14-1
The economy is in long-run equilibrium. Suddenly, due to improved international relations, a boom experienced by a major trading partner, and the increased confidence of policymakers, citizens become more optimistic about the future and stay this way for a long time.
-Refer to the Scenario 14-1. In the long-run, how does the change in price expectations created by optimism change the aggregate demand and aggregate supply diagram?

• A) The long-run aggregate-supply curve shifts left.
• B) The long-run aggregate-supply curve shifts right.
• C) The short-run aggregate-supply curve shifts right.
• D) The short-run aggregate-supply curve shifts left.

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Definitions:

Variable Overhead Spending Variance

The difference between the actual variable overheads incurred and the standard costs expected for the actual production level achieved.

Unfavorable

A term describing a situation or outcome that is negative or disadvantageous, often used in financial contexts.

Favorable

A term used in accounting and finance to describe results or variances that are better than expected or budgeted, indicating positive performance.

Variance Analysis

The process of analyzing the differences between budgeted and actual financial performance.