Supply Side Inflation Can Be Caused by

question 267

Multiple Choice

Supply side inflation can be caused by

• A)a continual increase in aggregate supply while aggregate demand remains unchanged.
• B)a continual decrease in aggregate supply while aggregate demand remains unchanged.
• C)a continual decrease in aggregate supply while aggregate demand has significant decreases.
• D)a continual increase in aggregate demand while aggregate supply remains unchanged.

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Definitions:

Unused Capacity

The available but unutilized production capability of a firm which could generate revenue if employed.

Fixed Overhead

Refers to the consistent, unchanging costs associated with running a business that do not vary with the level of production or sales.

Job-Order Costing

Job-order costing is an accounting method used to track costs and evaluate the profitability of individual jobs or batches.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products based on a selected activity base, such as machine-hours or labor-hours, calculated prior to the actual production.