Exhibit: AD-AS Shifts Starting from Long-Run Equilibrium at a with Output

question 36

Multiple Choice

Exhibit: AD-AS Shifts Starting from long-run equilibrium at A with output equal to and the price level equal to P₁, a demand-pull inflation would be represented by a shift from:

• A)AD₁ to AD_2.
• B)AD₁ to AD_3.
• C)AS₁ to AS_2.
• D)AS₁ to AS_3.

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Definitions:

Direct Materials Quantity Variance

A measure used in cost accounting to indicate the variance between the actual quantity of materials used and the standard quantity expected to be used in production.

Standard Material Requirement

The predetermined amount of materials specified for the production of a single unit of product, often used in budgeting and controlling costs.

Standard Cost

A predetermined or budgeted cost of manufacturing a product or performing a service, used as a benchmark to measure performance.

Direct Materials Quantity Variance

The difference between the actual quantity of direct materials used in production and the standard quantity expected, multiplied by the standard cost per unit.