Given a Real Interest Rate,a Decrease in Taxes on Saving

question 2

Multiple Choice

Given a real interest rate,a decrease in taxes on saving ________ the after-tax real interest rate and ________ the incentive to save.

• A) increases; increases
• B) increases; reduces
• C) decreases; increases
• D) decreases; reduces

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Definitions:

Materials Inventory

The raw materials, work-in-process, and finished goods that a company holds for the purpose of production.

Direct Materials Cost

The cost of raw materials that can be directly attributed to the production of goods.

Factory Machinery

Heavy equipment and tools used in a manufacturing or production environment to produce goods.

Factory Overhead Cost

Expenses related to the operation of a manufacturing facility that are not directly tied to a specific product, including utilities, depreciation, and maintenance.