Use the following to answer questions:
Figure: Fiscal Policy II 
-(Figure: Fiscal Policy II) Look at the figure Fiscal Policy II. Suppose that this economy is in equilibrium at E1. If there is a decrease in government purchases, _____ will shift to the _____, causing a(n) _____ in the price level and a(n) _____ in real GDP.
Definitions:
Predetermined Overhead Rate
A rate used to apply manufacturing overhead to products or job orders, calculated in advance based on estimated costs and activity levels.
Machine-Hours
A measure of the amount of time a machine is operated, often used as a basis for allocating manufacturing overhead costs in job-order and process costing systems.
Manufacturing Overhead
All indirect costs related to the manufacturing process, including costs for utilities, rent, and maintenance, that are not directly tied to production.
Predetermined Overhead Rate
A rate used to allocate manufacturing overhead costs to products or job orders, calculated by dividing estimated overhead costs by an allocation base.
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