In the Short Run with Fixed Prices,an Increase in Investment

question 222

Multiple Choice

In the short run with fixed prices,an increase in investment of $100 billion

• A) increases real GDP by $100 billion.
• B) increases real GDP by less than $100 billion.
• C) increases real GDP by more than $100 billion.
• D) decreases real GDP because of the decrease in induced expenditures.

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Definitions:

Variable Overhead

Costs that fluctuate with the level of production output, including expenses like utilities and raw materials.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a specific product.

Direct Labor-Hours

The total hours of work directly involved in manufacturing goods or providing a service.

Variable Overhead

The costs that fluctuate with the level of production output and may include expenses such as utilities and indirect materials.