Based on Our Understanding of the IS-LM Model That Takes

question 15

Multiple Choice

Based on our understanding of the IS-LM model that takes into account dynamics,we know that a reduction in government spending will cause

• A)an immediate drop in Y and immediate increase in i.
• B)an immediate reduction in i and no initial change in Y.
• C)a gradual reduction in i and gradual reduction in Y.
• D)a gradual reduction in i and an immediate reduction in Y.

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Definitions:

Standard Cost System

A cost accounting system where predetermined costs are used for valuing inventory and measuring performance.

Direct Labor Costs

The total of all wages, benefits, and taxes paid to employees who are directly involved in the manufacturing of products.

Work in Process

Goods that are in various stages of the production process but are not yet completed.

Standard Cost Card

A document listing the standard costs associated with manufacturing a product, including labor, materials, and overhead.