Figure 27-6 -Refer to Figure 27-6. in the Dynamic Model of AD-AS

question 208

Multiple Choice

Figure 27-6
-Refer to Figure 27-6. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, Congress and the president would most likely

• A) increase the money supply and decrease the interest rate.
• B) increase taxes.
• C) increase government spending.
• D) increase oil prices.
• E) raise interest rates.

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Definitions:

Credit Sales

Sales transactions where the payment is deferred to a future date, as opposed to cash sales where payment is made immediately.

Raw Materials

The basic materials and substances used in the initial stages of production before being transformed into final products.

Direct Labor Cost

The total cost of wages for labor directly involved in the production of goods or services.

Direct Labor Wage Rate

The rate of pay for workers who are directly involved in the production of goods or the provision of services.