Cindy Smith, VP of Finance at Digital Components, Inc

question 6

Multiple Choice

Cindy Smith, VP of Finance at Digital Components, Inc.(DCI) , theorizes that the discount level offered to credit customers affects the average collection period on credit sales.Accordingly, she has designed an experiment to test her theory using four sales discount rates (0%, 2%, 4%, and 6%) .First, she classified DCI's credit customers into three categories by total assets (small, medium, and large) .Then, she randomly assigned four customers from each category to a sales discount rate.In Cindy's experiment "sales discount rate" is ___.

• A)a surrogate variable
• B)the dependent variable
• C)a blocking variable
• D)a treatment variable
• E)a constant

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Definitions:

Price Level

An index of the average prices of goods and services throughout an economy, often used to measure inflation.

Nominal GDP

The gross domestic product measured in current prices, without adjustment for inflation.

Classical Dichotomy

The theoretical separation of nominal and real variables in the economy, suggesting that changes in the money supply only affect nominal variables.

Nominal Variables

Economic variables measured in current prices, without adjusting for inflation, reflecting their value in terms of current money.