Starting from Short-Run Equilibrium,the Following Occurs: the U

question 123

Multiple Choice

Starting from short-run equilibrium,the following occurs: the U.S.dollar depreciates and wage rates rise.Moreover,the effect on the economy from the dollar depreciating is stronger than the effect on the economy from rising wage rates.What is the effect on the price level and Real GDP in the short run?

• A) The price level falls and Real GDP falls.
• B) The price level rises and Real GDP falls.
• C) The price level falls and Real GDP rises.
• D) The price level rises and Real GDP rises.
• E) none of the above

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Definitions:

Direct Labor Hours

The number of hours worked by employees that are directly involved in the manufacturing process.

Production Department

The section within a manufacturing company responsible for the actual production of goods.

Plantwide Factory Overhead Rates

A single overhead rate calculated by dividing total factory overhead costs by a base, applied uniformly across all products regardless of department.

Plantwide Factory Overhead Rate

A single rate used to allocate all of a factory's indirect costs to its production activities, typically based on machine hours or labor hours.