In a Macro Model with a Constant Price Level, an Increase

question 91

Multiple Choice

In a macro model with a constant price level, an increase in government purchases will cause the AE curve to shift

• A)upward and the AD curve to shift to the left.
• B)downward and a movement to the right along the AD curve.
• C)downward and the AD curve to shift to the left.
• D)upward and the AD curve to shift to the right.
• E)downward and the AD curve to shift to the right.

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Definitions:

Volume Variance

A measurement of the difference between the actual production volume and the expected (or budgeted) production volume, affecting the costs incurred.

Variable Component

A cost associated with the production of goods or services that varies with the level of output or sales.

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to apply manufacturing overhead costs to products by estimating fixed and variable manufacturing overhead costs for the coming period.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual units of production, based on estimated costs.