If the Fed Carries Out an Open Market Operation to Buy

question 45

Multiple Choice

If the Fed carries out an open market operation to buy U.S. government securities, if the federal funds rate stays in the corridor the federal funds rate ________ and the quantity of reserves ________.

• A) falls; increases
• B) rises; increases
• C) falls; decreases
• D) rises; decreases

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Definitions:

Direct Materials Cost Variance

The difference between the budgeted cost of materials and the actual cost incurred for materials used in production.

Standard Materials Cost

The budgeted or estimated cost of raw materials required for production, used for cost control and variance analysis.

Material Used

The raw materials that have been consumed in the production process to create goods.

Total Labor Cost Variance

This refers to the difference between the actual labor costs incurred and the standard labor costs for the actual production levels.