Recall Application 2, "Two Approaches to Determining the Causes of Recessions

question 81

Multiple Choice

Recall Application 2, "Two Approaches to Determining the Causes of Recessions," to answer the following questions:
-According to the application, a recession is likely to be caused by a decrease in aggregate demand if:

• A) prices do not change but output changes in the long run.
• B) prices and output do not change in the long run.
• C) prices and output change in the long run.
• D) prices change but output does not change in the long run.

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Definitions:

Machine-Hours

A measure of production time referring to the total hours that machinery is in use during the manufacturing process.

Departmental Predetermined Rates

Standard rates used by departments to allocate costs based on estimated activity levels.

Manufacturing Overhead

All indirect costs associated with the production process, including costs related to factory equipment maintenance, utilities, and quality control.

Machine-Hours

A measure of the amount of time a machine is operated in the production process, used for allocating manufacturing overheads.