Equilibrium in the Economy Occurs When

question 5

Multiple Choice

Equilibrium in the economy occurs when:

• A) Aggregate demand equals withdrawals.
• B) Aggregate supply equals injections.
• C) Planned injections equal planned withdrawals.
• D) Aggregate demand equals investment.

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Definitions:

Absorption Costing

A costing method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed overhead—in the cost of a product.

Return on Investment

A performance measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the return of an investment by its cost.

Markup Percentage

The percentage by which the cost of a product is increased to determine its selling price.

Direct Materials

Direct materials are raw materials that are directly traceable to the manufacturing of a product and are a significant component of the total manufacturing cost.