The Equation of Exchange States That the Quantity of Money

question 298

Multiple Choice

The equation of exchange states that the quantity of money

• A) multiplied by the velocity of circulation equals nominal GDP.
• B) divided by price level equals real GDP.
• C) multiplied by nominal GDP equals the price level.
• D) divided by nominal GDP equals real GDP.

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Definitions:

Overhead Rate

A ratio used to allocate indirect costs to products or services, calculated by dividing total overhead costs by an allocation base, such as direct labor hours.

Direct Labor Cost

The total expense of employing workers who are directly involved in the production of goods, including wages and salaries.

Machine-hours

A measure of the total run time of machines in the manufacturing process, often used for costing purposes.

Overapplied Overhead

Overapplied overhead occurs when the allocated manufacturing overhead costs in an accounting period are less than the actual overhead costs incurred.