When Examining the Impact of Changes in the Interest Rate

question 39

Multiple Choice

When examining the impact of changes in the interest rate on saving, which of the following is true?

• A)higher interest rates may make saving more attractive
• B)higher interest rates allow individuals to save less each year to reach their retirement saving goal
• C)empirical evidence does not suggest that interest rate changes significantly affect saving
• D)all of the above
• E)none of the above

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Definitions:

Direct Material

Primary raw materials that can be specifically identified and directly charged to the manufacturing of a specific product.

Standard Quantity

This is the predetermined amount of materials or labor expected to be used in producing a unit of product or service.

Direct Material Price Variance

The difference between the actual cost of direct materials used and the expected (or standard) cost, which can indicate efficiency in purchasing materials.

Standard Costing

A cost accounting method that uses standard costs for direct materials, labor, and overhead to help managers control costs by comparing expected costs to actual costs.