The Money Multiplier ₂ Could Be Greater Than the Inverse

question 120

True/False

The money multiplier ₂ could be greater than the inverse of the reserve requirement.

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Definitions:

Standard Labour Rate

The predetermined or expected cost per unit of labor, used in budgeting and cost control.

Variable Overhead Efficiency Variance

The difference between the actual level of activity (direct labor-hours, machine-hours, or some other base) and the standard activity allowed, multiplied by the variable part of the predetermined overhead rate.

Direct Labour Hours

The total hours worked by employees directly involved in producing goods or delivering services, used to allocate labor costs accurately.

Standard Hours Allowed

The time that should have been taken to complete the period’s output. It is computed by multiplying the actual number of units produced by the standard hours per unit.