Demand-Side Inflation Occurs When

question 44

Multiple Choice

Demand-side inflation occurs when

• A) increases in aggregate demand are not matched by increases in aggregate supply.
• B) increases in aggregate supply outstrip increases in aggregate demand.
• C) aggregate demand falls more rapidly than aggregate supply.
• D) long-run aggregate demand rises faster than short-run aggregate supply.

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Definitions:

Fixed Manufacturing Overhead

Costs that do not vary with the level of production, such as rent, salaries, and insurance associated with manufacturing.

Variances

Differences between expected and actual performance in business metrics such as costs, revenues, and production levels.

Direct Labor-Hours

The total hours worked by employees directly involved in manufacturing goods or providing services.

Standard Costs

Pre-determined costs used as a benchmark for evaluating actual production costs within a business.