After an Increase in Autonomous Spending, in the Long Run

question 411

Multiple Choice

After an increase in autonomous spending, in the long run changes in the price level

• A) will make the AE curve steeper.
• B) will make the AE curve flatter.
• C) will reduce the effect of the multiplier.
• D) will not affect the multiplier.

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Definitions:

Job Order Cost System

An accounting system that accumulates costs by individual jobs or batches rather than processes.

Manufacturing Overhead Applied

The portion of manufacturing overhead costs assigned to individual cost objects based on a predetermined rate or method.

Total Manufacturing Costs

The sum of all costs directly involved in the production of goods, including raw materials, labor, and overhead.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated before the period begins based on estimated costs and activity levels.