A Stock Market Crash That Causes Stock Prices to Fall

question 127

Multiple Choice

A stock market crash that causes stock prices to fall should cause

• A)a decrease in consumption spending.
• B)an increase in consumption spending.
• C)an increase in wealth.
• D)no change in consumption spending.
• E)an increase in interest rates.

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Definitions:

Manufacturing Overhead

All indirect costs associated with the production process, including equipment maintenance, utilities, and factory management salaries.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products, based on a planned level of activity.

Capacity

The maximum level of output that a company can sustain to produce in a given period.

Allocation Base

A criterion or measure used for distributing overhead costs among various cost objects, such as departments or products.