Some Countries Have Had High Inflation for a Long Time

question 77

Multiple Choice

Some countries have had high inflation for a long time. Others have had low or moderate inflation for a long time. Which of the following, at least in theory, could explain why some countries would continue to have high inflation?

• A)High-inflation countries have relatively small sacrifice ratios and so see no need to reduce inflation.
• B)Inflation reduction works best when it is unexpected, and people in high-inflation countries would quickly anticipate any change in monetary policy.
• C)In a country where inflation has been high for a long time, people are likely to have found ways to limit the costs.
• D)Persistently low inflation has costs in terms of high unemployment.

Analyze the effects of different costing methods (plantwide vs. departmental) on job costs.

Understand activity-based costing (ABC) and its application to manufacturing overhead allocation.

Calculate unit product costs using traditional and ABC systems.

Evaluate the impact of unused capacity on overhead rates and costs.

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Definitions:

Equipment

Tangible property used in the operations of a business, not intended for sale, with a useful life extending beyond a year.

Asset Account

An account that records the value of economic resources owned by an entity, which are expected to provide future benefits.

Cash Account

A cash account is a financial account that records cash transactions, including cash receipts and payments, managing the flow of liquid assets.

Journal Entry

A record in accounting that represents a transaction and its effect on various accounts, ensuring the debits and credits balance.