An Increase in Investment Causes the Price Level to ________

question 18

Multiple Choice

An increase in investment causes the price level to ________ in the short run and ________ in the long run.

• A)increase; increase further
• B)increase; decrease
• C)decrease; decrease further
• D)decrease; increase

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Definitions:

Direct Labour

refers to the workforce directly involved in the manufacture of goods or provision of services.

Fixed Manufacturing Overhead

Indirect manufacturing costs that remain relatively constant regardless of the level of production, such as rent, salaries, and insurance.

Contribution Margin

The amount remaining from sales revenue after variable expenses are deducted, indicating how much contributes to covering fixed costs and generating profit.

Net Operating Income

The income generated from normal business operations after subtracting operating expenses from gross profit.