Real GDP Is $5 Trillion and Aggregate Planned Expenditure Is

question 243

Multiple Choice

Real GDP is $5 trillion and aggregate planned expenditure is $7 trillion.As a result, unplanned inventory change is ________ and real GDP ________.

• A) positive; decreases
• B) positive; increases
• C) negative; increases
• D) negative; decreases
• E) negative; does not change

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Definitions:

Materials Variance

The difference between the expected cost of direct materials and the actual cost incurred.

Price Variance

The difference between the actual cost of a good or service and its expected or budgeted cost.

Quantity Variance

The difference between the actual quantity of materials or labor used in production and the expected (or standard) quantity, affecting cost and efficiency.

Direct Labor Price Variance

The difference between the expected cost of direct labor and the actual cost incurred.