The Monetary Approach Assumes That the Following Assumption Holds

question 13

Multiple Choice

The monetary approach assumes that the following assumption holds:

• A)domestic and foreign bonds are perfect substitutes
• B)covered interest arbitrage holds
• C)expectations do not affect the future spot exchange rate.
• D)the risk premium is positive

---

Definitions:

Machine-Hours

A measure of the amount of time machines are used in the production process, often used as an allocation base for assigning overhead costs.

Variable Overhead Rate Variance

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

Standard Machine-Hours

A predetermined measure of the amount of machine time required to produce a unit of product under normal operating conditions.

Manufacturing Overhead

All indirect costs associated with the production process, including costs for utilities, depreciation of machinery, and factory staff salaries.