An Increase in the Price Level in Japan Relative to the Price

question 93

Multiple Choice

An increase in the price level in Japan relative to the price level in the United States would

• A)increase U.S.net exports and increase aggregate demand.
• B)increase U.S.net exports and increase aggregate supply.
• C)reduce U.S.net exports and reduce aggregate demand.
• D)reduce U.S.net exports and increase aggregate demand.

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Definitions:

Relevant Costs

Costs that will be affected by a decision and are future-oriented.

Predetermined Overhead Rate

A rate used to charge manufacturing overhead cost to jobs that is established in advance for each period. It is computed by dividing the estimated total manufacturing overhead cost for the period by the estimated total amount of the allocation base for the period.

Special Order

A one-time order or contract that is outside of a company’s normal production or service offerings, often requiring special terms.

Variable Cost

Costs that vary directly with the level of production or volume of output.