Fiscal Policy Is MOST Effective If

question 180

Multiple Choice

Fiscal policy is MOST effective if:

• A) nominal wages and prices are totally flexible.
• B) taxpayers care about how fiscal policy is financed.
• C) the economy is hit by a shock to aggregate demand.
• D) most resources are fully employed.

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Definitions:

Predetermined Overhead Rate

The rate used to allocate manufacturing overhead to individual products or job orders, calculated before the period begins based on estimated costs and activity levels.

Machine-Hours

A measure of production time, indicating the total hours that machines have been operating during a given period.

Fixed Manufacturing Overhead

The total of all costs that remain constant regardless of the level of production within a certain range.

Machining Department

A division within a manufacturing facility where machining processes such as cutting, drilling, or shaping are performed.