The Logic of the Multiplier Effect Applies

question 58

Multiple Choice

The logic of the multiplier effect applies

• A)only to changes in government spending.
• B)to any change in spending on any component of GDP.
• C)only to changes in the money supply.
• D)only when the crowding-out effect is sufficiently strong.

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Definitions:

Direct Labor Price Variance

The difference between the actual cost of direct labor and the expected (or standard) cost of direct labor used during production.

Direct Labor Payroll

The total amount of money paid to employees directly involved in manufacturing products or providing services.

Standard Rate of Pay

The regular amount of pay given for standard work hours or for performing a standard task or job.

Unfavorable Variance

The difference between actual costs and standard or budgeted costs when actual costs are higher, indicating lower profitability.