The Long-Run Budget Constraint Says That

question 105

Multiple Choice

The long-run budget constraint says that:

• A) a country will be able to borrow in perpetuity.
• B) a country will have to always balance its budget in the short-run.
• C) a country's expenditure must equal its production.
• D) a country's expenditure can be higher than its production.

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Definitions:

Variable Costing

A costing method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.

Excess Capacity

The amount by which the actual production of a company exceeds its planned production capacity.

Variable Production Costs

Expenses that change in direct proportion to the level of production output.

Cost-Volume-Profit Analysis

An accounting method used to determine how changes in costs and volume affect a company's operating income and net income.