Considering Primary Effects Through the Price Level, Interest Rates, and Income

question 3

Multiple Choice

Considering primary effects through the price level, interest rates, and income only, contractionary fiscal policy:

• A)increases both the supply and demand for dollars.
• B)increases the supply of dollars but reduces the demand.
• C)reduces the supply of dollars but increases the demand.
• D)reduces both the supply and demand for dollars.

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Definitions:

Variable Overhead Rate Variance

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

Direct Materials

Raw materials that are directly traceable and allocable to the production of specific goods or services.

Raw Materials Price Variance

The difference between the actual cost of raw materials and the standard cost multiplied by the actual quantity used.

Raw Materials Quantity Variance

The difference between the actual quantity of raw materials used in production and the estimated quantity, which can indicate inefficiencies or savings in material usage.