According to the Permanent Income Hypothesis, Why Did Consumption and Borrowings

question 47

Multiple Choice

According to the permanent income hypothesis, why did consumption and borrowings grow substantially in the late 1990s and 2000s?

• A) The late 1990s and 2000s was a period of sustained and historically low interest rates.
• B) The government enacted income tax cuts for a year beginning in 1990.
• C) The prices of assets like property were continually falling in the late 1990s and 2000s.
• D) In the late 1990s and 2000s, the level of consumer confidence was low as employment

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Definitions:

Plantwide Overhead Allocation

A method of allocating indirect costs to products based on a single overhead rate used throughout an entire plant or company.

Budgeted Costs

Estimated financial expenditures forecasted for a specific future period, often categorized by type or department.

Departmental Overhead Rates

The allocation of indirect costs to specific departments based on a predetermined formula, used to accurately assign costs to products based on the departments they pass through.

Direct Labor Hours

The total hours of labor directly involved in the manufacturing or production of goods, often used as a basis for allocating manufacturing overhead.