An Increase in the Price Level Results in A(n)________ in the Quantity

question 192

Multiple Choice

An increase in the price level results in a(n) ________ in the quantity of real GDP demanded because ________.

• A)decrease; a higher price level reduces consumption, investment, and net exports
• B)increase; a higher price level reduces consumption, investment, and net exports
• C)decrease; a higher price level increases consumption, investment, and net exports
• D)increase; a higher price level increases consumption, investment, and net exports
• E)increase; a higher price level reduces consumption, investment and government spending

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Definitions:

Variable Manufacturing Overhead

The portion of manufacturing overhead costs that varies with production volume.

Opportunity Cost

The value of the best alternative foregone as a result of making a decision, representing the benefit that could have been gained from the next best choice.

Fixed Manufacturing Cost

This refers to the consistent expenses incurred by a company for its manufacturing operations, excluding variable costs; it includes costs like rent, salaries of permanent staff, and depreciation of factory equipment.

Variable Manufacturing Cost

Costs that vary directly with the level of production output, such as raw materials and direct labor.