The Great Recession Illustrated the Situation Where a Negative Demand

question 163

Multiple Choice

The Great Recession illustrated the situation where a negative demand shock occurred and

• A) prices adjusted but the output level was inflexible.
• B) the economy's overall price level was very flexible.
• C) the economy's overall price level was "sticky."
• D) prices and production were both "sticky," or inflexible.

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Definitions:

Manufacturing Overhead

Costs related to the manufacturing process but not directly traceable to specific units produced, such as utility costs and salaries of maintenance personnel.

Overhead Variances

Differences between the estimated and actual overhead costs in manufacturing or business operations.

Fixed Manufacturing Overhead

The portion of manufacturing overhead costs that remains constant regardless of the level of production, such as depreciation of equipment and salary of supervisors.

Budget Variance

The difference between budgeted and actual figures for a given period, indicating under or overspending.