An Expenditure Schedule That Lies Below the Full Employment Level

question 171

Multiple Choice

An expenditure schedule that lies below the full employment level of GDP will cause

• A)rising prices.
• B)increasing output.
• C)falling inventories.
• D)falling prices.

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Definitions:

Absorption Costing

A costing method where all of the costs associated with manufacturing a product are absorbed by the units produced, including both variable and fixed manufacturing costs.

Operating Income

Earnings before interest and taxes (EBIT), representing the profit a company makes from its core operations.

Capacity

The maximum amount of work that an organization is capable of completing in a given period of time.

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.