Use the Model Developed in Chapter 3 and Assume That

question 34

Multiple Choice

Use the model developed in Chapter 3 and assume that consumption does not depend on the interest rate. In this case, when the government lowers taxes on business investment, thus increasing desired investment, but does not change government spending or change any taxes that affect disposable income:

• A)investment increases and the interest rate rises.
• B)investment is unchanged and the interest rate rises.
• C)investment and the interest rate are both unchanged.
• D)investment decreases and the interest rate rises.

---

Definitions:

Work in Process

Inventory consisting of items that are in the process of being manufactured but are not yet complete.

Raw Materials Transactions

Activities and records pertaining to the purchase, usage, and inventory management of raw materials used in the production process.

November

The eleventh month of the year in the Gregorian calendar, marking the late autumn in the Northern Hemisphere and late spring in the Southern Hemisphere.

Direct Labor Cost

Direct labor cost refers to the expenses associated with employees who directly contribute to the production of goods or services.