A Lender Need Not Be Penalized by Inflation If the

question 96

Multiple Choice

A lender need not be penalized by inflation if the

• A)long-term rate of inflation is less than the short-term rate of inflation.
• B)short-term rate of inflation is less than the long-term rate of inflation.
• C)lender correctly anticipates inflation and increases the nominal interest rate accordingly.
• D)inflation is unanticipated by both borrower and lender.

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Definitions:

Unit Product Cost

The aggregate expenditure linked with manufacturing an individual product unit, covering materials, employee wages, and overhead expenses.

Predetermined Overhead Rate

A rate established in advance to allocate overhead costs to products or job orders, based on an expected activity level.

Machine-Hours

A measure of the amount of time machines are run, often used as a base for allocating factory overhead.

Total Job Cost

The cumulative cost of materials, labor, and overhead for a specific job or project.