Other Things Being Equal, When the Domestic Price Level Rises

question 49

Multiple Choice

Other things being equal, when the domestic price level rises exogenously,

• A)imports of foreign goods fall.
• B)Canadian goods become more expensive relative to foreign goods.
• C)the aggregate expenditure function shifts upward.
• D)the net export function shifts upward.
• E)the desired investment function shifts upward.

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Definitions:

Manufacturing Overhead Application Rate

A rate used to allocate manufacturing overhead costs to products based on a predetermined activity base, such as labor hours or machine hours.

Direct Labor Dollars

The cost of labor that can be directly attributed to the production of goods or services.

Indirect Labor

The wages of employees who are not directly involved in producing goods but support the production process, such as maintenance staff and supervisors.

Cost of Production

The total expense incurred in manufacturing a product or providing a service, including raw materials, labor, and overhead costs.