How Would Increases in Tolerable Misstatement and Assessed Level of Control

question 39

Multiple Choice

How would increases in tolerable misstatement and assessed level of control risk affect the sample size in a substantive test of details?

• A) An increase in tolerable misstatement would increase sample size, but an increase in assessed level of control risk would decrease sample size.
• B) Both an increase in tolerable misstatement and an increase in assessed level of control risk would increase sample size.
• C) Both an increase in tolerable misstatement and an increase in assessed level of control risk would decrease sample size.
• D) An increase in tolerable misstatement would decrease sample size, but an increase in assessed level of control risk would increase sample size

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Definitions:

Inflation

A universal hike in costs and decline in the monetary value.

Long-Run Phillips Curve

An economic concept stating that in the long run, there is no trade-off between inflation and unemployment, depicted as a vertical line at the natural rate of unemployment.

Fiscal Policy

Fiscal policy involves government spending and taxation to influence the economy.

Inflation Rate

The percentage increase in the price level of goods and services over a period of time.