If Aggregate Demand Increases and Expectations Regarding Inflation Remain Constant

question 8

Multiple Choice

If aggregate demand increases and expectations regarding inflation remain constant:

• A) the long- run Phillips curve shifts to the right.
• B) the economy moves left along the short- run Phillips curve.
• C) the short- run Phillips curve shifts to the right.
• D) the short- run Phillips curve shifts to the left.

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Definitions:

Labour Efficiency Variance

The difference between the actual labor hours used and the standard labor hours expected, multiplied by the standard labor rate.

Direct Labour Used

The total effort, measured in hours or costs, of workers directly involved in the manufacturing process of a product.

Variable Manuf. Overhead

Costs that vary with production volume, such as utilities and materials used in manufacturing.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, valued at standard cost.