In a Private Closed Economy, Where Aggregate Expenditures Exceed Domestic

question 113

Multiple Choice

In a private closed economy, where aggregate expenditures exceed domestic output:

• A)domestic output will decline to the break-even level.
• B)business inventories will rise.
• C)saving exceeds planned investment.
• D)planned investment exceeds saving.

---

Definitions:

Fixed Overhead

Indirect costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Budget Variance

The difference between budgeted or planned financial activity and the actual financial performance.

Fixed Overhead

Costs that do not change with the level of production or business activity, such as rent, salaries of permanent staff, and insurance.

Volume Variance

The difference between the budgeted and actual volume of units sold or produced, impacting direct materials, direct labor, and overhead costs.