Deflation Refers to a Situation Where

question 24

Multiple Choice

Deflation refers to a situation where

• A) the price level falls; it could be caused by a shift of AD to the left.
• B) the price level falls; it could be caused by a decrease in aggregate supply.
• C) the rate of inflation falls; it could be caused by a shift of AS to the right.
• D) the rate of inflation rises; it could be caused by a decrease in aggregate demand.

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Definitions:

Variable Manufacturing Overhead

Costs in manufacturing that vary with the level of production output, such as materials and labor directly involved in production.

Direct Labor-hours

The total hours worked by employees directly involved in the manufacturing process or producing a service, often used as a basis for allocating overhead costs.

Direct Materials

Raw materials that can be directly associated with the production of specific goods or services.

Standard Cost Card

A document that lists the expected costs of materials, labor, and overhead associated with producing a particular product or performing a service.