Pessimism Suppose the Economy Is in Long-Run Equilibrium. Then Because of of Corporate

question 46

Multiple Choice

Pessimism
Suppose the economy is in long-run equilibrium. Then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time.


-Refer to Optimism.What happens to the expected price level and what's the result for wage bargaining?

• A)The expected price level falls.Bargains are struck for higher wages.
• B)The expected price level falls.Bargains are struck for lower wages.
• C)The expected price level rises.Bargains are struck for higher wages.
• D)The expected price level rises.Bargains are struck for lower wages.

Evaluate the advantages and limitations of various capital investment decision methods.

Understand the concept and calculation of the profitability index for investment decisions.

Calculate and interpret the after-tax accounting rate of return on investments.

Evaluate investment options based on net present value and profitability index.

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Definitions:

Direct Materials

Raw materials that are directly used in the manufacturing of a product and can be directly traced to the goods being produced.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead to individual units of production based on a specific activity base.

Direct Labor-Hours

The total hours worked directly on the production of goods.

Manufacturing Overhead

All indirect costs associated with the production process, including costs related to factory operation but not directly traceable to the product, such as maintenance and utilities.