In Response to a Temporary Change in Total Factor Productivity

question 52

Multiple Choice

In response to a temporary change in total factor productivity, the adoption of capital controls under a flexible exchange rate

• A)amplifies the effect of this disturbance on both domestic output and the nominal exchange rate.
• B)dampens the effect of this disturbance on domestic output and amplifies the effect on the nominal exchange rate.
• C)dampens the effect of this disturbance on both domestic output and the real exchange rate.
• D)dampens the effect of this disturbance on both domestic output and the nominal exchange rate.
• E)amplifies the effect of this disturbance on domestic output and dampens the effect on the nominal exchange rate.

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Definitions:

Direct Labor Standards

Established benchmarks that specify the amount of direct labor time and the cost that should be involved in producing one unit of finished goods.

Labor Cost

The total amount of money paid for employee wages, benefits, and taxes by a business.

Variable Overhead Efficiency Variance

The difference between the actual and expected (or standard) use of variable overheads based on the actual activity levels.

Variable Manufacturing Overhead

The portion of manufacturing overhead costs that varies directly with the level of production, such as utility costs for machinery.