An Inflationary Gap Exists When Consumers

question 134

Multiple Choice

An inflationary gap exists when consumers

• A)are saving more than businesses are investing.
• B)and businesses are purchasing less than the economy is capable of producing.
• C)and businesses are demanding more than the economy is capable of producing.
• D)and businesses are demanding less than the full employment level of output.

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Definitions:

Standard Costs

Predetermined costs to manufacture a single unit or a number of units of a product during a specific period.

Direct Materials Used

Raw materials directly utilized in the production of goods, traceable to the finished product.

Units Completed

The total number of finished goods produced within a specific accounting period.

Standard Overhead Cost

The pre-determined or estimated cost of indirect expenses that a company expects to incur during a specific period.