When a Nonprice Change Affects Any of the Four Components

question 139

Multiple Choice

When a nonprice change affects any of the four components of GDP, the:

• A) aggregate demand curve will shift.
• B) economy will move up or down along the aggregate demand curve.
• C) aggregate demand curve will remain unaffected.
• D) aggregate supply curve will shift.

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Definitions:

Predetermined Overhead Rate

A rate used to assign manufacturing overhead costs to individual units of production, calculated in advance based on estimated costs and activity levels.

Direct Labor-Hour

A measure of the amount of work in hours directly involved in manufacturing a product or delivering a service.

Manufacturing Overhead Budget

A financial plan detailing the projected or expected indirect costs involved in the manufacturing process, excluding direct labor and materials.

Variable Expenses

Costs that vary directly with the level of production or business activity, such as raw materials and commissions.