A Decrease in Aggregate Demand in the Economy Will Have

question 148

Multiple Choice

A decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?

• A)The price level will fall,and the level of GDP will be unaffected.
• B)The price level will fall,and the level of GDP will fall.
• C)The price level will rise,and the level of GDP will fall.
• D)The price level will rise,and the level of GDP will be unaffected.

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Definitions:

Work in Process

Inventory that includes goods in the midst of the production process, between raw materials and finished goods stages.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor costs.

Predetermined Rate

An estimated rate used to apply manufacturing overhead costs to products, calculated before the actual overhead costs are known.

Direct Labour Cost

The expense associated with workers who are directly involved in the production of goods or services, distinguished from indirect labor costs like supervision and maintenance.