When Prices Are Rising,which of the Following Will Be True

question 40

Multiple Choice

When prices are rising,which of the following will be true?

• A)The real interest rate will be lower than the nominal interest rate.
• B)The real interest rate will be negative.
• C)The real interest rate will be higher than the nominal interest rate.
• D)The nominal interest rate will be negative.

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Definitions:

Weighted-Average Method

An inventory costing method where costs of goods are calculated based on the weighted average of the costs of similar items.

Process Costing System

A method of costing used where identical or highly similar goods are produced, assigning costs to units of product based on the process they undergo.

Weighted-Average Method

An inventory costing method that averages the cost of goods available for sale and assigns the average cost to both the cost of goods sold and remaining inventory.

Equivalent Units

Equivalent units are a concept in cost accounting used to compute the number of units that could have been completed given the amount of work done, taking partially completed units into account.