If the Fed Buys a T-Bill from an Individual Rather

question 92

Multiple Choice

If the Fed buys a T-bill from an individual rather than from a bank, the effect on the money supply is

• A)smaller because there is no multiplier process.
• B)larger because of the multiplier process.
• C)the same.
• D)impossible to predict without knowing the value of the multiplier.

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Definitions:

Materials Price Variance

The difference between the actual cost of raw materials and the standard cost expected to be paid, reflecting changes in price.

Raw Materials Price Variance

A measure of the difference between the actual cost of raw materials and the expected (standard) cost.

Labor Efficiency Variance

The difference between the budgeted and actual hours worked, multiplied by the standard labor rate, indicating efficiency in labor usage.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (standard) variable overhead rate multiplied by the actual activity level.