According to Expectations Theory, the Sudden Expectation of Lower Interest

question 2

Multiple Choice

According to expectations theory, the sudden expectation of lower interest rates in the future will cause investors to provide a ____ supply of short-term funds and a ____ supply of long-term funds.

• A)large; large
• B)large; small
• C)small; small
• D)small; large

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Definitions:

Variable Costing

An accounting method in which costs that vary directly with production volume (such as materials and labor) are included in product costs, whereas fixed costs are not.

Absorption Costing

A system of accounting that entails adding all expenses incurred in production, including direct materials, direct labor, and both variable and fixed overheads, into the cost calculation of a product.

Product Cost

The total cost of manufacturing or purchasing a product, including raw materials, labor, and overhead expenses.

Per Unit

A term referring to expressing or measuring amounts for each single item or instance.