Table 11.5 -Refer to Table 11.5.Consider the Hypothetical Information in the Table

question 168

Multiple Choice

Table 11.5
-Refer to Table 11.5.Consider the hypothetical information in the table above for potential real GDP, real GDP, and the price level in 2017 and in 2018 if the Bank of Canada does not use monetary policy.If the Bank of Canada uses monetary policy successfully to keep real GDP at its potential level in 2018, which of the following will be higher than if the Bank of Canada had taken no action?

• A)real GDP and the unemployment rate
• B)real GDP and the inflation rate
• C)real GDP and potential GDP
• D)potential GDP and the inflation rate
• E)unemployment and the participation rate

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Definitions:

Machine-Hours

An indicator of the amount of time machines are actively running, reflecting the cumulative hours of operation over a defined timeframe.

Predetermined Overhead Rate

An estimated rate used to assign overhead costs to products or services, based on a relevant activity base.

Manufacturing Overhead

All manufacturing costs other than direct materials and direct labor, including expenses such as rent, utilities, and equipment depreciation.

Predetermined Overhead Rate

An estimated rate used to allocate indirect costs to products or services, based on a selected activity base such as machine-hours or labor-hours.