Which of the Following Statements Is Most Consistent with the View

question 43

Multiple Choice

Which of the following statements is most consistent with the view that the economy has a self-corrective mechanism?

• A)When the economy is in a recession,it will remain there until the government steps in to bring the economy out of the recession.
• B)When the economy is in a recession,falling resource prices and declining interest rates will direct the economy back to full employment.
• C)During economic booms,interest rates will fall,causing the economy to fall into a recession.
• D)In a market economy,resource prices,such as wages,can only increase;they can never decrease.

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Definitions:

Predetermined Overhead Application Rate

A rate calculated before the accounting period begins, used to allocate overhead costs to products or services based on a certain base.

Direct Labour Cost

The cost that can be directly attributed to the production of goods or services, including wages and benefits for workers who are actively involved in the manufacturing process.

Direct Material

Raw materials that are directly traceable to the manufacturing of a specific product and are an essential component of its production.

Process Costing

An accounting methodology used for homogenous products, where costs are assigned to production processes or departments and averaged over the units produced.