According to the Rational Expectations Model, When Does Active Policy

question 100

Multiple Choice

According to the rational expectations model, when does active policy have an impact on aggregate output?  

• A) only when active policy is expansionary 
• B) only when active policy is contractionary 
• C) only when active policy is unannounced 
• D) only when the economy has a contractionary gap

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Definitions:

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost allotted for the actual production achieved, indicating the efficiency of utilizing variable resources.

Materials Quantity Variance

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

Favorable

A term used in variance analysis indicating that actual costs were lower than budgeted or standard costs, leading to higher profits.

Unfavorable

A term used in variance analysis to describe a situation where actual results are worse than expected results, often leading to a negative impact on financial performance.