Consider the Basic AD/AS Model

question 108

Multiple Choice

Consider the basic AD/AS model. Suppose that a rising percentage of high- school graduates are illiterate, resulting in a decrease in average labour productivity. This change will

• A)shift the AD curve to the right.
• B)shift the AS curve to the right.
• C)shift the AS curve to the left.
• D)shift the AD curve to the left.
• E)cause a movement to the right along the AS curve.

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Definitions:

LIFO Periodic

An inventory valuation method where the last items to be added to inventory are the first ones to be removed, applied at the end of an accounting period.

Average Cost

refers to the total cost of production divided by the number of units produced, also known as unit cost.

Cost Of Goods Sold

Cost of goods sold (COGS) is the direct cost attributed to the production of the goods sold by a company, including material and labor costs, but excluding indirect expenses.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated by adding new purchases to beginning inventory and subtracting cost of goods sold.