Which of the Following Does NOT Occur When the Economy

question 4

Multiple Choice

Which of the following does NOT occur when the economy is operating at the equilibrium level of GDP?

• A) Total planned expenditures equal real GDP.
• B) Real GDP tends to rise over time.
• C) Planned investment equals actual investment.
• D) Inventory investment equals zero.

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Definitions:

Unit Product Cost

The total cost associated with producing a single unit of product, including direct materials, direct labor, and allocated overhead.

Absorption Costing

An accounting method that includes all manufacturing costs (direct labor, direct materials, and both variable and fixed manufacturing overhead) in the cost of a product.

Unit Product Cost

The total cost (both fixed and variable) incurred to produce, store, and sell one unit of a product.

Variable Costing

An accounting method that only considers variable costs for product costing, excluding fixed overheads.