If Most of the Shocks That Buffet the Economy Come

question 39

Multiple Choice

If most of the shocks that buffet the economy come from the output market shocks, then

• A) fixed exchange rates are better than flexible exchange rates.
• B) flexible exchange rates are better than fixed exchange rates.
• C) which system is chosen is not important.
• D) fixed exchange rates are better than flexible exchange rates only in the short run.
• E) flexible exchange rates are better than fixed exchange rates only in the short-run.

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Definitions:

Conversion Costs

Conversion costs refer to the sum of direct labor and manufacturing overhead costs that are incurred to convert raw materials into finished goods.

Material Costs

The cost of raw materials used in the production of goods.

Equivalent Units

A method used in cost accounting to allocate costs to partially completed goods, calculated as the number of complete units that could have been produced with the amount of work done.

Conversion Costs

refer to the combined costs of direct labor and manufacturing overhead incurred to convert raw materials into finished products.