Which of the Following Does the Open-Economy Macroeconomic Model Take

question 184

Multiple Choice

Which of the following does the open-economy macroeconomic model take as given?

• A)GDP, but not the price level
• B)the price level, but not GDP
• C)both the price level and GDP
• D)the exchange rate

---

Definitions:

Inventory

The raw materials, work-in-progress, and finished goods that a company holds for the purpose of sale in the future.

Absorption Costing

A method of accounting that encompasses all costs associated with manufacturing a product, including direct materials, direct labor, and all manufacturing overhead costs, both fixed and variable.

Variable Costing

A costing method where only variable costs (costs that change with production volume) are included in the product cost, excluding fixed costs.

Fixed Manufacturing Overhead

Costs that remain constant regardless of the level of production, such as rent, utility bills, and salaries for certain employees.