Marta Lends Money at a Fixed Interest Rate and Then

question 17

Multiple Choice

Marta lends money at a fixed interest rate and then inflation turns out to be higher than she had expected it to be.The real interest rate she earns is

• A)higher than she had expected,and the real value of the loan is higher than she had expected.
• B)higher than she had expected,and the real value of the loan is lower than she had expected.
• C)lower than she had expected,and the real value of the loan is higher than she had expected.
• D)lower then she had expected,and the real value of the loan is lower than she had expected.

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Definitions:

Continuing Operations

Continuing operations refer to the segments of a business that are expected to continue operating and generating revenue in the foreseeable future, excluding any discontinued operations.

Factory Overhead Allocation

The process of assigning indirect manufacturing costs, such as utilities and rent, to individual products or production activities.

Product Cost

The total cost involved in making a product, including direct labor, direct materials, and manufacturing overhead.

Plantwide Factory Overhead Rate

A single overhead absorption rate used throughout an entire plant or factory, calculated by dividing total overhead costs by a common base like labor hours or machine hours.