-The Data in the Above Table Indicate That Autonomous Expenditure

question 62

Multiple Choice

$$\begin{array} { | l | l | } \hline \begin{array} { l } \text { Real GDP } \\\text { (trillions of 2005 } \\\text { dollars) }\end{array} & \begin{array} { l } \text { A ggregate } \\\text { expenditure } \\\text { (trillions of 2005 } \\\text { dollars) }\end{array} \\\hline 0 & 0.3 \\\hline 1.0 & 1.2 \\\hline 2.0 & 2.1 \\\hline 3.0 & 3.0 \\\hline 4.0 & 3.9 \\\hline 5.0 & 4.8 \\\hline\end{array}$$
-The data in the above table indicate that autonomous expenditure is

• A) $3.0 trillion.
• B) $0.3 trillion.
• C) $4.8 trillion.
• D) None of the above answers is correct.

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Definitions:

Fixed Manufacturing Overhead

The consistent, indirect costs associated with manufacturing that do not vary with the level of production, such as rent, insurance, and salaries of permanent staff.

Variable Costing

A costing method that includes only variable production costs (direct materials, direct labor, and variable overhead) in product costs, excluding fixed overhead.

Absorption Costing

A method of product costing that incorporates all manufacturing costs, including both fixed and variable costs, in the price of a product.

Variable Costing

An accounting method that charges only variable costs to cost of goods sold and reports fixed costs separately as period costs.