A Specific Reduction in Government Spending Will Dampen Demand-Pull Inflation

question 201

Multiple Choice

A specific reduction in government spending will dampen demand-pull inflation by a greater amount the

• A)smaller is the economy's MPC.
• B)flatter is the economy's aggregate supply curve.
• C)smaller is the economy's MPS.
• D)less is the economy's built-in stability.

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Definitions:

Support Department Costs

Costs associated with the functions that assist the operational activities of a company, including HR, IT, and maintenance services, indispensable for production but not part of the direct manufacturing process.

Sequential Method

A process approach where tasks or operations are performed one after another in a specific order.

ABC

Activity-Based Costing, a method of assigning overhead and indirect costs to specific products or activities based on their use of resources.

Step-Down Method

A method of allocating support department costs to production departments that considers some inter-support-department services in a sequential or step-down fashion. Also known as the sequential method.