Inflationary and Recessionary Gaps Are Closed by Self-Correcting Adjustments That

question 41

Multiple Choice

Inflationary and recessionary gaps are closed by self-correcting adjustments that shift:

• A) the SRAS curve.
• B) the AD curve.
• C) the LRAS curve.
• D) both the SRAS curve and the LRAS curve.

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Definitions:

Manufacturing Overhead

Indirect costs associated with manufacturing, such as maintenance, utilities, and quality control, not directly traceable to a specific product.

Direct Labor

Labor costs directly tied to the production of goods or services, which include wages for workers who physically produce a product.

Manufacturing Overhead

Expenses related to the manufacturing process that are not directly tied to the production of goods, such as utility costs, maintenance, and factory rent.

Relevant Range

The range of activity within which the assumptions about variable and fixed cost behaviors are valid for a specific operation or business scenario.