FIGURE 23-5 -Refer to Figure 23-5.Suppose That an Increase in Autonomous Investment

question 62

Multiple Choice

FIGURE 23-5
-Refer to Figure 23-5.Suppose that an increase in autonomous investment caused the AD curve to shift to the right,as shown.If the simple multiplier in this model is 5,then what is the value of the multiplier?

• A)1.2
• B)1.5
• C)4.0
• D)5.0
• E)not enough information to know

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Definitions:

Labor Efficiency Variance

The difference between the actual number of labor hours worked and the standard hours expected, multiplied by the standard labor rate.

Labor Rate Variance

The difference between the actual cost of labor and its expected cost based on standards or budgets.

Direct Labor Employees

Workers who are directly involved in the manufacturing of products, including those who operate machinery, assemble products, or perform manual labor that can be directly attributed to specific goods or services.

Favorable Variances

Differences between actual and budgeted or standard cost figures that are financially beneficial to a company.