An Increase in the Price Level Shifts the AE Curve

question 24

Multiple Choice

An increase in the price level shifts the AE curve

• A) upward and shifts the AD curve leftward.
• B) upward and shifts the AD curve rightward.
• C) downward and does not shift the AD curve.
• D) downward and shifts the AD curve leftward.
• E) downward and shifts the AD curve rightward.

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to individual units of production, based on estimated costs.

Direct Materials

These are raw materials that are directly traceable to the manufacturing of a product.

Direct Labour-Hours

The sum of working hours for employees actively participating in the manufacturing procedure.

Direct Materials

Raw materials that are directly traceable and integral to the finished product, and which can be directly allocated to the manufacturing process.