11.4 Consequences of Changes in Aggregate Demand

question 76

Multiple Choice

11.4 Consequences of Changes in Aggregate Demand

-Refer to the above figure. An increase in aggregate demand beyond real Gross Domestic Product (GDP) level Y₁ would result in

• A)higher real GDP but not a higher price level.
• B)a lower price level but no change in real GDP.
• C)a higher price level but no change in real GDP.
• D)a lower price level and an increases in real GDP.

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Definitions:

Equivalent Units

Equivalent units are a concept in cost accounting used to allocate costs to partially completed goods, treating them as if they were a certain number of fully completed units.

Job Order

A custom or production order that specifies the details for manufacturing a certain product or products for a customer.

Process Cost

The cost associated with a production process, allocated to products based on the process they go through rather than being directly traced to the product itself.

Conversion Costs

Conversion costs are the costs incurred to convert raw materials into finished products, including direct labor and manufacturing overhead.