Suppose the Economy Is in Long-Run Equilibrium and There Is

question 252

Multiple Choice

Suppose the economy is in long-run equilibrium and there is an increase in investment.As a result,real GDP will ________ in the short run,and ________ in the long run.

• A)increase; increase further
• B)increase; decrease to its initial value
• C)decrease; decrease further
• D)decrease; increase to its initial level

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Definitions:

Traditional Costing

An accounting method that allocates manufacturing overhead costs to products based on the volume of production resources consumed.

Direct Labor-Hours

A measure of the work done by employees directly involved in the manufacturing process, counted in hours.

Activity Cost Pools

A grouping of all costs associated with a specific activity, used in activity-based costing to more accurately allocate overhead costs.

Activity Rates

Rates used in Activity-Based Costing to assign overhead costs to products or services, based on specific activities that drive those costs.