You Have Just Read That Australia Has Suffered a Drought,destroying

question 4

Multiple Choice

You have just read that Australia has suffered a drought,destroying its wheat crop for this year.The effect of this adverse supply shock on Australia would probably be

• A)an increase in prices and an increase in real interest rates.
• B)an increase in prices, an increase in nominal interest rates, but a decrease in real interest rates.
• C)a decrease in prices and a decrease in real interest rates.
• D)a decrease in prices, a decrease in nominal interest rates, but an increase in real interest rates.

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Definitions:

Direct Labor Hours

The total time workers spend on creating a product or service, often used as an allocation base in cost accounting.

Overhead Assigned

The process of allocating indirect costs, such as utilities or rent, to specific cost objects like products or departments.

Allocation Base

A measure or statistic used to distribute costs among different departments or activities, typically related to cost accounting practices.

Departmental Overhead Rate

The speed at which overhead expenses are distributed to goods or services according to activities specific to each department.