In Preparing Their Estimates of the Stimulus Package's Effect on GDP,Obama

question 214

Multiple Choice

In preparing their estimates of the stimulus package's effect on GDP,Obama administration economists estimated a government purchases multiplier of 1.57.This indicates that a ________ increase in government purchases would increase equilibrium real GDP by $157 billion

• A)$1 billion
• B)$10 billion
• C)$100 billion
• D)$157 billion

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Definitions:

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual products based on a relevant activity base, such as labor hours.

Indirect Labor

Workers or labor costs that support the production process but are not directly involved in the creation of the product.

Supplies

Items or materials used in the production process or in the operation of a business.

Fixed Overhead Volume

refers to the portion of fixed overhead costs that is associated with the production volume, used in calculating efficiency and profitability.