Which of the Following Would Be Evidence That a Contractionary

question 41

Multiple Choice

Which of the following would be evidence that a contractionary gap exists?

• A)Rapid deflation during a period in which plant capacity utilization is below average.
• B)A steady price level and a 5 percent unemployment rate.
• C)Help wanted advertising lower than usual,and the consumer price index lower than expected.
• D)Inflation has risen markedly and the Dow Jones average is at record levels.
• E)The number of new unemployment claims has skyrocketed and the price level is rising.

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Definitions:

Fixed Cost

Costs that do not vary with the volume of production or sales, remaining constant over a specified range of activity and period of time, such as rent or salaries.

Units Sold

The total number of a product that a company sells within a particular period, indicating the volume of business activity.

Profit-volume Chart

A graphical representation that shows the relationship between a company's profits and its volume of sales.

Sales Mix

The proportion of different products or services that a company sells, affecting its overall profitability due to varying margins.