What Sequence of Events Results from an Increase in Aggregate

question 265

Multiple Choice

What sequence of events results from an increase in aggregate demand?

• A) The price level falls, inventories decline, firms respond by increasing output and employment.
• B) The price level falls, inventories increase, firms respond by reducing output and employment.
• C) The price level rises, inventories decline, firms respond by increasing output and employment.
• D) The price level rises, inventories increase, firms respond by increasing output and employment.

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Definitions:

Activity-based Approach

A methodological approach that focuses on identifying and managing activities as the fundamental cost objects, aiming to improve business processes and allocate costs more precisely.

Job Costing Approach

A system used to assign manufacturing costs to an individual product or batches of products, commonly used in industries where products are distinct like construction or custom manufacturing.

Selling Price Per Unit

The amount charged to the customer for a single unit of product or service.

Contribution Margin

A financial metric that represents the difference between a company's sales revenue and variable costs, used to cover fixed costs and profits.