The Table Below Shows Data for Indonesia Between 2005 and 2006

question 326

Multiple Choice

The table below shows data for Indonesia between 2005 and 2006. $$\begin{array} { | l | c | c | } \hline & \mathbf { 2 0 0 5 } & \mathbf { 2 0 0 6 } \\\hline \text { Money growth rate } & 21.4 & 12.0 \\\hline \text { Real GDP growth rate } & 5.7 & 5.5 \\\hline\end{array}$$
Assume the rate of velocity change is constant. According to the quantity theory of money,Indonesia's inflation rate

• A) is higher in 2005 than in 2006.
• B) was 17.5 percent in 2006.
• C) is 27.1 percent in 2005.
• D) will increase over the 12 months.

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Definitions:

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products or job orders, based on a chosen activity base such as direct labor hours.

Variable Component

A part of a cost or expense that varies directly with the level of output or activity.

Fixed Component

A cost that remains unchanged in total regardless of changes in the level of activity or output over a certain period.

Overapplied

This refers to the condition in which the allocated costs in an accounting system exceed the actual costs incurred, often in the context of overhead or indirect costs in manufacturing.