If the Economy Is Currently in Equilibrium at a Level

question 203

Multiple Choice

If the economy is currently in equilibrium at a level of GDP that is below potential GDP, which of the following would move the economy back to potential GDP?

• A)an increase in wealth
• B)an increase in interest rates
• C)a decrease in business confidence
• D)an increase in the value of the dollar relative to other currencies
• E)a decrease in government spending

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Definitions:

Manufacturing Overhead

All indirect costs associated with manufacturing, excluding direct materials and direct labor.

Underapplied Manufacturing Overhead

A situation where the allocated manufacturing overhead cost is less than the actual overhead incurred.

Manufacturing Overhead Account

An account that accumulates all indirect costs associated with the production process, excluding direct materials and direct labor costs.

Work in Process

Inventory that includes materials that have been partially processed but are not yet complete finished goods in a manufacturing setting.