Exhibit 10A-6 Aggregate Demand and Supply Model

question 83

Multiple Choice

Exhibit 10A-6 Aggregate demand and supply model
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Given the shift of the aggregate demand curve from AD₁ to AD₂ in Exhibit 10A-6, the real GDP and price level (CPI) in long-run equilibrium will be:

• A) $10 billion and 200.
• B) $4 billion and 150.
• C) $10 billion and 150.
• D) $10 billion and 100.

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Definitions:

Labor-Intensive Department

A department within a company that relies more on human labor than on machinery or automation to produce goods or provide services.

Capital-Intensive Department

A division within a company that requires a large investment in capital assets relative to its labor cost.

Single Plantwide Factory Overhead Rate

A method of allocating total factory overhead to products based on a single rate, often using total direct labor hours or machine hours.

Plantwide Factory Overhead Rate

A single overhead absorption rate calculated by dividing total factory overheads by total machine hours or labor hours, applied uniformly across all products and services.