In a Private Closed Economy, Where Aggregate Expenditures Exceed Domestic

question 113

Multiple Choice

In a private closed economy, where aggregate expenditures exceed domestic output:

• A)domestic output will decline to the break-even level.
• B)business inventories will rise.
• C)saving exceeds planned investment.
• D)planned investment exceeds saving.

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Definitions:

Job Order Cost System

A type of cost accounting system that provides for a separate record of the cost of each quantity of product (job) that is manufactured.

Conversion Costs

The combined costs of direct labor and manufacturing overhead, representing the expenses necessary to convert raw materials into finished goods.

Direct Materials

Raw materials that can be directly associated with the production of goods or services and are considered a variable cost.

Equivalent Units

A concept in cost accounting used to convert the quantity of partially completed goods into a full equivalent number based on their stage of completion.