When the Fed Increases the Money Supply by Buying Treasury

question 153

Multiple Choice

When the Fed increases the money supply by buying Treasury securities, it will

• A) decrease short-term interest rates to a greater degree than long-term interest rates.
• B) decrease long-term interest rates to a greater degree than short-term interest rates.
• C) increase short-term interest rates to a greater degree than long-term interest rates.
• D) increase long-term interest rates to a greater degree than short-term interest rates.

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Definitions:

Variable Overhead

Costs incurred during production that fluctuate with production volume, such as utilities or materials.

Total Variable Overhead Variance

The difference between actual variable overhead costs and the expected (standard) costs for the same period.

Direct Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected, multiplied by the standard labor rate, indicating the efficiency of labor used in production.

Direct Labor Costs

Direct labor costs are the wages and benefits paid to employees who are directly involved in the production of goods or services, constituting part of the total manufacturing costs.