If Personal Taxes Were Decreased and Input Productivity Increased Simultaneously

question 151

Multiple Choice

If personal taxes were decreased and input productivity increased simultaneously, the equilibrium:

• A)output would rise.
• B)output would fall.
• C)price level would necessarily fall.
• D)price level would necessarily rise.

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Definitions:

Factory Overhead

All indirect costs associated with manufacturing, excluding direct materials and direct labor expenses.

Period Cost

Costs that are not directly tied to the production process and are expensed in the period they are incurred.

Variable Production

Production processes or costs that change in proportion to the output level or activity of a company.