A Rise in the Price Level

question 38

Multiple Choice

A rise in the price level

• A) decreases the quantity of real GDP demanded.
• B) decreases aggregate demand.
• C) has no effect on aggregate demand or on the quantity of real GDP demanded.
• D) increases aggregate demand.
• E) increases the quantity of real GDP demanded.

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Definitions:

Direct Labor-Hours

The total hours of labor directly involved in the production of goods or services, often used as a basis for allocating labor costs to products.

Variable Manufacturing Overhead

Indirect manufacturing costs that fluctuate with production volume, such as utilities and maintenance expenses.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected, multiplied by the standard labor rate.

Direct Materials Purchases Variance

The difference between the actual cost of direct materials purchased and the expected cost of direct materials, based on standard cost.