Exhibit 11-5 -In an Economy Characterized by the Aggregate Expenditure Line in Expenditure

question 56

Multiple Choice

Exhibit 11-5
-In an economy characterized by the aggregate expenditure line in Exhibit 11-5,if government spending was independent of the level of real GDP what would the government spending multiplier be equal to?

• A)0
• B)1
• C)2
• D)3

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Definitions:

Standard Rate of Pay

The regular amount of pay given for standard work hours or for performing a standard task or job.

Unfavorable Variance

The difference between actual costs and standard or budgeted costs when actual costs are higher, indicating lower profitability.

Actual Costs

The real, specific expenses incurred or required to perform an operation, produce an item, or offer a service.

Standard Costs

Predetermined costs to manufacture a single unit or a number of units during a specific period under current or anticipated operating conditions.