Exhibit 15-2 Aggregate Demand and Supply Model

question 99

Multiple Choice

Exhibit 15-2 Aggregate demand and supply model

-Suppose the economy in Exhibit 15-2 is in equilibrium at point E₁ and the marginal propensity to consume (MPC) is 0.75.Following Keynesian economics,the federal government can move the economy to full employment at point E₂ by:

• A) decreasing government tax revenue by $100 billion.
• B) decreasing government tax revenue by $750 billion.
• C) increasing government tax revenue by $100 billion.
• D) increasing government tax revenue by approximately $33 billion.
• E) decreasing government tax revenue by approximately $33 billion.

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Definitions:

Weighted-Average Method

A costing method used in process costing that averages the costs of all units available for sale during a period, both beginning inventory and produced during the period.

Ending Work

The work or tasks that are in process or yet to be completed at the end of a reporting period.

Process Inventory

Inventory that consists of items that are in various stages of being processed in a manufacturing environment but are not yet completed products.

Cost System

A method for collecting, recording, and analyzing costs related to a specific way of managing expenses within an organization, project, or process.