If the Inflation Rate Is Zero, Then

question 361

Multiple Choice

If the inflation rate is zero, then

• A)both the nominal interest rate and the real interest rate can fall below zero.
• B)the nominal interest rate can fall below zero, but the real interest rate cannot fall below zero.
• C)the real interest rate can fall below zero, but the nominal interest rate cannot fall below zero.
• D)neither the nominal interest rate nor the real interest rate can fall below zero.

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Definitions:

Labour Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, based on the hours worked.

Favourable Variance

A financial term indicating that actual costs were lower than budgeted costs, or actual revenues were higher than expected.

Variances

The differences between planned financial outcomes and the actual results, used in budgeting and accounting to track performance and plan future activities.

Cost of Goods Sold

The total cost associated with producing goods that have been sold during a specific period, including materials and labor.