What Is the Problem with Saving in DVCs, Even When

question 145

Multiple Choice

What is the problem with saving in DVCs, even when saving as a percentage of domestic output is the same as in industrially advanced countries?

• A)The interest rate paid on money kept in a bank in DVCs is not as high as the interest rate on money kept in a bank in an IAC.
• B)Capital flight reduces investment opportunities and the need for saving in DVCs.
• C)There is a continual brain drain that removes skilled labor from the work force and reduces labor productivity and the need for saving.
• D)The domestic output of DVCs is so low that the absolute volume of saving is small.

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Definitions:

Unit Product Cost

The total cost associated with manufacturing a single unit of product, including direct materials, labor, and overhead expenses.

Predetermined Overhead Rate

A rate used to apply overhead costs to products, calculated before the accounting period begins based on estimated costs and activity levels.

Manufacturing Overhead

refers to all the indirect costs associated with the production process, excluding direct materials and direct labor.

Direct Labor-Hours

The total time worked by employees directly involved in manufacturing a product or providing a service.