If the Income Elasticity of Money Demand Is Less Than

question 33

Multiple Choice

If the income elasticity of money demand is less than 1, then

• A)the velocity of money must decrease as the level of income increases
• B)income can never increase faster than money supply
• C)changes in the interest rate will never affect money demand
• D)an increase in income will be reflected in a proportionately smaller increase in money demand
• E)an increase in income will be reflected in a proportionately larger increase in money demand

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Definitions:

Overhead Cost Performance Report

A document that compares the actual overhead costs incurred to the budgeted or standard overhead costs, for the purpose of monitoring and controlling these costs.

Efficiency Variances

Variances that occur when the actual performance deviates from the expected standards, often analyzed in terms of time, cost, and materials.

Budget Variance

The difference between budgeted figures for revenue and expenditure, and the actual amounts realized.

Budgeted Fixed Overhead

The estimated constant costs for a period that do not vary with the level of production or sales, such as rent, salaries, and insurance.