Following the Lifting of Price Controls That Had Been Implemented

question 9

Multiple Choice

Following the lifting of price controls that had been implemented in the early 1970s, inflation skyrocketed.  Economists' explanations for this acceleration in the price level include

• A) the increase in the money supply that also occurred during the early 1970s.
• B) increases in the federal government deficit, especially in 1971 and 1972.
• C) supply-side shocks in oil and food.
• D) the release of inflationary pressures that built up during the period of price controls.
• E) All of the above.

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Definitions:

Transferred-in Materials

Raw materials or components that have been moved from one stage of production to another, often accumulating costs along the way.

Equivalent Units

A concept used in cost accounting to convert partially completed goods into a number of complete units of output, facilitating cost analysis.

Conversion Cost

Conversion Cost refers to the combined expenses of labor and overhead costs required to convert raw materials into finished products.

Weighted Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all goods available for sale during the period.