Figure 21-6

question 33

Multiple Choice

Figure 21-6. On the left-hand graph, MS represents the supply of money and MD represents the demand for money; on the right-hand graph, AD represents aggregate demand. The usual quantities are measured along the axes of both graphs.
-Refer to Figure 21-6. Suppose the multiplier is 3 and the government increases its purchases by $25 billion. Also, suppose the AD curve would shift from AD₁ to AD₂ if there were no crowding out; the AD curve actually shifts from AD₁ to AD₃ with crowding out. Finally, assume the horizontal distance between the curves AD₁ and AD₃ is $30 billion. The extent of crowding out, for any particular level of the price level, is

• A)$25 billion.
• B)$30 billion.
• C)$45 billion.
• D)$60 billion.

Understand how indirect materials are treated in process costing.

Discover the importance of lean manufacturing in reducing unit costs.

Identify how equivalent units are calculated for different production elements.

Understand the impacts of adopting average costing versus FIFO on unit costs.

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Definitions:

Average Total Cost

The cost per unit of output, calculated by dividing the total cost of production by the total number of units produced.

Marginal Revenue

The added revenue procured by vending an additional unit of a good or service.

Business

An organized effort by individuals to produce and sell goods and services for profit.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the total quantity produced.