Which of the Following Would Cause Inflation to Fall but National

question 95

Multiple Choice

Which of the following would cause inflation to fall but national output to rise?

• A) An increase in aggregate demand.
• B) A decrease in consumption.
• C) A relatively higher increase in wages than the rate of inflation.
• D) An increase in aggregate supply.

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Definitions:

Predetermined Overhead Rate

An estimated rate used to apply manufacturing overhead to products or job orders, based on a related activity base such as machine hours or direct labor hours.

Variable Manufacturing Overhead

Costs that vary with the level of production output, such as utilities for machinery, that are associated with the manufacturing process.

Direct Labor-Hours

The measure of the amount of time workers spend directly producing goods or services, important in calculating labor expenses and production efficiency.

Fixed Manufacturing Overhead

Represents the set of costs that are required to operate a manufacturing facility, which do not vary with the volume of production.