Refer to the Information Provided in Figure 12

question 102

Multiple Choice

Refer to the information provided in Figure 12.8 below to answer the questions that follow.
Figure 12.8
-Refer to Figure 12.8.Suppose the economy is currently at Point A producing potential output Y₀.If the government increases spending,the economy moves to Point ________ in the short-run and to Point ________ in the long-run.

• A)D; E
• B)B; C
• C)C; B
• D)B; D

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Definitions:

Finished Goods Inventory

The stock of completed products that are ready to be sold but have not yet been purchased by customers.

Work in Process

Partially completed goods that are still in the production process at the end of an accounting period.

Manufacturer's Inventory

Includes raw materials, work in process, and finished goods held by a manufacturer, representing various stages of production.

Raw Materials Inventory

The total cost of all the components that will be used in the production of goods but have not yet been used.