If the Interest Rate Rises, How Does This Affect How

question 86

Multiple Choice

If the interest rate rises, how does this affect how much money people hold?  

• A) People hold less money, because its opportunity cost has increased. 
• B) People hold more money, because its opportunity cost has increased. 
• C) People hold less money, because its opportunity cost has declined. 
• D) People hold more money, because its opportunity cost has declined.

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Definitions:

Material Price Variance

The difference between the actual cost of materials purchased and the expected (or standard) cost, indicating how efficiently materials are being purchased.

Material Usage Variance

The difference between the actual amount of materials used in production and the standard amount expected, valued at the standard cost.

Quality Of Materials

The measure of suitability of the materials used in production, affecting the durability and functionality of the final product.

Labour Rate Variance

The difference between the actual cost of direct labor and the estimated cost based on the standard labor rate.