-In the Above Figure, If the Economy Is Initially at Point

question 222

Multiple Choice

-In the above figure, if the economy is initially at point a, the short-run effect of a cut in the federal funds rate is given by movement from point

• A) a to point b, increasing output and the unemployment rate.
• B) a to point b, increasing output and decreasing the unemployment rate.
• C) a to point d, decreasing output and increasing the unemployment rate.
• D) a to point c, keeping output and the unemployment rate constant.

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Definitions:

Variable Costing

An accounting method that only includes variable production costs (materials, labor, and overhead) in product cost calculations, excluding fixed costs.

Operating Income

Profit generated from a company's regular business operations, excluding expenses like taxes and interest.

Contribution Margin

The amount of revenue remaining after deducting variable costs, which can be used to cover fixed costs and contribute to profit.

Fixed Costs

Expenses that do not change with the level of output or sales over a short period, such as rent, salaries, and insurance.