The Short- Run Aggregate Supply Curve

question 239

Multiple Choice

The short- run aggregate supply curve

• A) shifts because of changes in the price level.
• B) shows the impact changes in the price level have on the quantity of real GDP when resource prices are constant.
• C) illustrates the level of potential real GDP.
• D) is vertical.

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Definitions:

Variable Overhead

Those overhead costs that vary in total directly and proportionately with changes in production or activity level.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected variable overhead based on a standard rate.

Direct Materials Purchases Variance

The difference between the actual cost of direct materials purchased and the expected (budgeted) cost of these materials.

Standard Direct Labor-Hours

The estimated amount of labor time required to produce one unit of output, based on established standards.