When the Velocity of Circulation Equals 4 in 2010, This

question 262

Multiple Choice

When the velocity of circulation equals 4 in 2010, this fact means that

• A) consumers held four dollars in wealth for each dollar they spent in 2010.
• B) on average, each dollar of money in the economy purchased four dollars of goods and services in GDP in 2010.
• C) for each additional dollar of money injected into the economy, the price level rose 4 percent in 2010.
• D) real output of goods and services in GDP rose by four dollars for each additional dollar of money consumers saved.

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Definitions:

Cost Per Unit

The total cost incurred by a company to produce, store, and sell one unit of a particular product or service.

Predetermined Overhead Rate

A rate used to charge manufacturing overhead cost to jobs that is established in advance for each period. It is computed by dividing the estimated total manufacturing overhead cost for the period by the estimated total amount of the allocation base for the period.

Costing System

A method for assessing and allocating costs of production, typically involving direct costs, indirect costs, and overheads.

Washing Mitt

A tool made of soft material used for washing surfaces, typically vehicles, without causing scratches.