Which of the Following Statements Is True Regarding Interest Rates

question 43

Multiple Choice

Which of the following statements is true regarding interest rates and quantity of investment demanded?

• A) Higher rates of interest raise the opportunity cost of investment and therefore increase the quantity of investment demanded.
• B) Higher rates of interest lower the opportunity cost of investment and therefore reduce the quantity of investment demanded.
• C) Higher rates of interest raise the opportunity cost of investment and therefore reduce the quantity of investment demanded.
• D) Higher rates of interest lower the opportunity cost of investment and therefore increase the quantity of investment demanded.

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Definitions:

Ending Work In Process

The value of goods that are partially completed at the end of an accounting period, not yet ready for sale.

Equivalent Units

A concept in cost accounting used to express the amount of materials or labor in terms of fully completed units.

Conversion Costs

The combination of direct labor costs and manufacturing overhead costs that are incurred to convert raw materials into finished products.

Process Cost System

An accounting methodology used for homogenous products that accumulates costs in each process or department and assigns them to units of product evenly.