Which of the Following Would Be Strong Evidence That Imperfect

question 43

Multiple Choice

Which of the following would be strong evidence that imperfect information explained departures of actual demand from potential?

• A) noting that the theory of imperfect information provides a story of how the departure might come about without relying on sticky prices
• B) observing that positive price shocks in the real world seem to happen just prior to an economic boom
• C) observing that positive price shocks in the real world seem to happen just prior to an economic recession
• D) observing that negative price shocks in the real world seem to happen just before an economic boom
• E) none of the above

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Definitions:

Direct Material Cost

The cost of raw materials that can be directly attributed to the goods being produced.

Predetermined Overhead Rate

A rate used in costing to allocate indirect costs to products or services based on a predetermined formula.

Job Order Costing

An accounting method used to track costs and evaluate the expenses associated with specific jobs or batches.

Process Costing

Process Costing is an accounting methodology used to allocate costs to units of product in processes where the products are indistinguishable from each other, such as in manufacturing of chemicals or food.