The Natural Rate Hypothesis States That When the Inflation Rate

question 179

Multiple Choice

The natural rate hypothesis states that when the inflation rate _______, in the short run the unemployment rate ________ and in the long run the unemployment rate ________.

• A) rises, decreases; returns to the natural unemployment rate
• B) rises, decreases; decreases
• C) falls, decreases; decreases
• D) falls, decreases; returns to the natural unemployment rate
• E) falls, increases; decreases

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Definitions:

Departmental Overhead Rates

The allocation of indirect costs to specific departments based on relevant cost drivers or bases.

Plantwide Rate

A single overhead absorption rate used throughout an entire factory or plant, applied uniformly to all cost objects irrespective of the department in which they were created.

Budgeted Activity Rate

The estimated overhead rate used for budgeting, calculated based on anticipated levels of activity.

Manufacturing Overhead Rate

The ratio used to allocate manufacturing overhead costs to products based on a cost driver, such as labor hours or machine hours.