-Using the Data in the Above Table, If Potential GDP

question 9

Multiple Choice

-Using the data in the above table, if potential GDP for this economy is $25 billion, then in order to restore full employment, the cash rate can be

• A) raised so that consumption expenditure, investment and net exports increase.
• B) lowered so that consumption expenditure, investment and net exports increase.
• C) lowered so that government expenditure on goods and services increases.
• D) raised so that net exports increase.
• E) lowered so that consumption expenditure and investment increase, though net exports decrease.

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Definitions:

Direct Materials

The raw materials that are directly traceable to the production of a specific product.

Indirect Labor

Costs associated with employees who assist in the production process but do not directly work on products, such as supervisors and maintenance staff.

Direct Materials Used

The raw materials directly used in the production of goods, traceable to the end product.

Direct Labor

Labor provided by employees who are directly involved in the production of goods or the delivery of services, forming an essential part of the production process.