If Increases in Total Spending Are Not Offset by Increases

question 35

Multiple Choice

If increases in total spending are not offset by increases in the supply of goods and services, the average level of prices will rise. Which of the following is responsible?

• A) Cost-push inflation
• B) Profit-push pressures
• C) Demand-pull inflation
• D) Wage-push pressures
• E) Unemployment

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Definitions:

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process, used as a basis for allocating overhead costs.

Machine-Hours

A measure of the amount of time machines are operated during the production process, used for allocating costs or measuring productivity.

Markup

The additional sum included in the purchase price of products to account for overhead expenses and profit.

Variable Manufacturing Overhead

Expenses that vary with production volume, such as utilities and materials.