An Open Market Purchase by the Fed

question 104

Multiple Choice

An open market purchase by the Fed

• A) increases investment and increases output.
• B) increases investment and decreases output.
• C) decreases investment and increases output.
• D) decreases investment and decreases output.

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Definitions:

Markup

The difference between the cost of a good or service and its selling price, expressed as a percentage of the cost.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate overhead costs to products or cost objects based on a planned activity level.

Total Manufacturing Cost

The aggregate cost of direct materials, direct labor, and manufacturing overhead incurred in producing products.

Machine-Hours

A measure of production time, referring to the number of hours a machine is operated in the manufacturing process.