If the Economy Is in Long Run Equilibrium and Aggregate

question 276

Multiple Choice

If the economy is in long run equilibrium and aggregate demand increases, then in the short run

• A) nothing happens because the economy is in long run equilibrium.
• B) the price level rises and real GDP does not change.
• C) real GDP increases and the price level does not change.
• D) the price level rises and real GDP increases.

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Definitions:

Variable Costing

An accounting method that considers only variable costs as product costs and treats fixed costs as period costs that are expensed in the period incurred.

Income Statement

An income statement is a financial document that summarizes an organization's revenue, expenses, and profit or loss over a specific period.

Manufacturing Costs

The total expenses involved in the production of goods, including direct materials, direct labor, and manufacturing overhead.

Costing Method

An accounting approach used to determine the cost of production or operation, such as FIFO, LIFO, or average cost method.