12.2 Equilibrium in Aggregate Demand and Supply Analysis

question 54

Multiple Choice

12.2 Equilibrium in Aggregate Demand and Supply Analysis
AD - AS Equilibrium
-On the graph above,consider a point A on the aggregate demand curve and above the aggregate supply curve.At this point,________.

• A)quantity demanded equals output,but the inflation rate will fall,so output will rise
• B)quantity demanded is greater than quantity supplied,so the inflation rate will rise
• C)output is greater than the quantity demanded,so output will fall
• D)the aggregate demand curve will shift to the right until quantity demanded is equal to quantity supplied
• E)none of the above

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Definitions:

Credit Sales

Sales made on account, allowing customers to pay for goods or services at a later date.

Direct Labor

The wages paid to employees who are directly involved in the production of goods or provision of services, considered a variable cost.

Direct Labor Rate

The cost per hour for labor directly involved in the production of goods or services.

Indirect Labor Rate

The cost of labor that cannot be directly traced to the production of goods or services, but is necessary for the process.