-Use the Figure Above to Answer This Question

question 4

Multiple Choice

-Use the figure above to answer this question. At a price level of 90

• A) people will be forced to cut consumption so that aggregate demand will decrease.
• B) the aggregate quantity demanded exceeds real GDP and inventories will decrease.
• C) inventories increase and firms will increase production.
• D) the aggregate quantity demanded exceeds real GDP, inventories increase and the price level will rise.

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Definitions:

Standard Costs

A predetermined cost of manufacturing, distributing, or selling products or services, which is used for budgeting and assessing performance.

Manufacturing Overhead

The indirect costs associated with manufacturing, not directly assignable to a specific product, such as factory rent, utilities, and equipment maintenance.

Cash Account

An account that records cash transactions, including cash received and cash paid out, within a business.

Direct Labor

The wages of employees who are directly involved in the production of goods or delivery of services.