Use the Following to Answer Questions

question 155

Multiple Choice

Use the following to answer questions:
-(Figure: Actual and Natural Rates of Unemployment) Refer to Figure: Actual and Natural Rates of Unemployment. In 2011 the output gap was:

• A) positive.
• B) negative.
• C) zero.
• D) impossible to determine without more information.

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Definitions:

Variable Cost

Costs that change in proportion to the level of production activity or volume, such as raw material costs and direct labor costs.

Fixed Cost

A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If a fixed cost is expressed on a per unit basis, it varies inversely with the level of activity.

Margin of Safety Percentage

A metric that measures how much sales can drop before a business reaches its break-even point, typically expressed as a percentage.

Variable Expenses

Costs that vary directly with the level of production or business activity.