Consider the Basic AD/AS Macro Model

question 56

Multiple Choice

Consider the basic AD/AS macro model.A rise in an input price like the price of oil would be expected to cause a new macroeconomic equilibrium in which the price level

• A)and real GDP are higher than in the initial equilibrium.
• B)and real GDP are lower than in the initial equilibrium.
• C)is lower and real GDP higher than in the initial equilibrium.
• D)is higher and real GDP remained the same as in the initial equilibrium.
• E)is higher and real GDP lower than in the initial equilibrium.

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Definitions:

Labor Costs

The total amount of compensation, including wages, salaries, and benefits, paid to employees for their work.

Allocated Fixed Costs

Costs that remain constant for a specific period regardless of the level of production or business activity, which are distributed across different departments or products.

Variable Departmental Costs

Costs that vary directly with the volume of output or level of activity within a specific department.

Direct Fixed Costs

Costs that are directly linked to a specific department or cost center and do not vary with the level of production or sales.