An Economic Contraction Caused by a Shift in Aggregate Demand

question 262

Multiple Choice

An economic contraction caused by a shift in aggregate demand remedies itself over time as the expected price level

• A)rises, shifting aggregate demand right.
• B)rises, shifting aggregate demand left.
• C)falls, shifting aggregate supply right.
• D)falls, shifting aggregate supply left.

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Definitions:

Activity Rate

A ratio used to allocate costs to products or services based on the activities that are required to produce them.

Cost Pool

A grouping of individual costs in accounting, typically by department or service center, from which costs are allocated to products or services based on a relevant allocation base.

Overhead Costs

Expenses associated with the day-to-day running of a business that are not directly linked to the production or selling of goods and services.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and considered a part of the product’s cost.