If Aggregate Planned Expenditure Exceeds Real GDP, Then Inventories

question 26

Multiple Choice

If aggregate planned expenditure exceeds real GDP, then inventories

• A)remain constant and real GDP remains constant.
• B)increase and real GDP falls.
• C)increase and real GDP increases.
• D)decrease and real GDP decreases.
• E)decrease and real GDP increases.

Distinguish between fixed and variable costs and calculate total cost at different activity levels.

Identify and calculate manufacturing overhead costs.

Calculate and interpret the cost per unit under varying production levels.

Understand and apply cost formulas to predict costs at different levels of production.

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Definitions:

Market Potential

An estimate of the maximum total sales of a product or service that could be achieved within a specific market segment over a certain time period.

Market Saturation

A situation in which a product or service has become so widespread that the market is considered fully served, limiting further growth.

Actual Market

The existing market where a company's products or services are currently being sold, as opposed to potential new markets.

Contribution Margin

The amount by which the sale of a product or service exceeds its production and selling costs, indicating how much contributes to covering fixed costs and generating profit.