What Should Happen to the Equilibrium Interest Rate and the Corresponding

question 60

Multiple Choice

What should happen to the equilibrium interest rate and the corresponding rate of investment if the Fed decreases the discount rate?

• A)The equilibrium interest rate and the equilibrium rate of investment should both increase.
• B)The equilibrium interest rate should increase,and the equilibrium rate of investment should decrease.
• C)The equilibrium interest rate should decrease,and the equilibrium rate of investment should increase.
• D)The equilibrium interest rate and the equilibrium rate of investment should both decrease.

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected variable overhead based on the predetermined overhead rate.

Power

In a business context, it often refers to the influence or capacity of a company or individual to effect decisions and control resources.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard cost of the variable overhead applied to a production process.

Variable Overhead Rate Variance

The difference between the actual variable overhead rate incurred and the expected (or standard) rate, multiplied by the actual activity level.