Supporters of Using Government Expenditures to Respond to Recession

question 152

Multiple Choice

Supporters of using government expenditures to respond to recession

• A)argue that monetary policy should be used first. An increase in the money supply will reduce interest rates.
• B)argue that monetary policy should be used first. An increase in the money supply will raise interest rates.
• C)argue that monetary policy should be used only after fiscal policy has been used. An increase in the money supply will reduce interest rates.
• D)argue that monetary policy should be used only after fiscal policy has been used. An increase in the money supply will raise interest rates.

---

Definitions:

Direct Materials

Raw materials directly traceable to the production of goods, considered a variable cost.

Overhead Cost

Indirect costs related to the general operation of a company, such as rent, utilities, and administrative salaries, not directly tied to the production of goods or services.

Incremental Cost

The additional cost associated with producing one extra unit of production or conducting an activity.

Direct Labor

The workforce directly involved in manufacturing a product or delivering a service, whose costs are directly attributable to the product.