Starting from Long-Run Equilibrium in the Dynamic Model of Aggregate

question 78

Multiple Choice

Starting from long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, a five-period positive demand shock causes output to _____ until returning to the natural level in the long run.

• A) remain continuously above the natural level of output
• B) move above and then below the natural level of output
• C) remain continuously below the natural level of output
• D) move below and then above the natural level of output

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Definitions:

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all units available.

Process Costing

An accounting methodology that traces and accumulates direct costs, and allocates indirect costs of a manufacturing process, to determine the cost of each product.

Processing Department

An organizational unit where work is performed on a product and where materials, labor, or overhead costs are added to the product.

Equivalent Units

A measure used in cost accounting to express the amount of work done by employees and machines in terms of fully completed units of output.