An Increase in the Price Level and a Reduction in Real

question 77

Multiple Choice

An increase in the price level and a reduction in real GDP could be created by

• A)a fall in stock prices.
• B)natural disasters such as hurricanes and famines.
• C)declining government expenditures.
• D)tax rebates.

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Definitions:

Budget

A quantitative plan for acquiring and using resources over a specified time period.

Static Budget

A budget prepared for a single level of activity, without changes for variations in sales or production volumes, often used for fixed expenses.

Revenue Variance

The difference between actual revenue and budgeted or forecasted revenue, indicating the effectiveness of business strategies.

Variable Cost Variances

Differences between the actual and expected or budgeted variable costs in the production process.