An Increase in the Domestic Interest Rate Relative to Other

question 276

Multiple Choice

An increase in the domestic interest rate relative to other interest rates should

• A)increase investment spending.
• B)decrease consumption spending.
• C)decrease government spending.
• D)increase net exports.
• E)decrease the exchange rate.

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Definitions:

Markup

The additional sum included in the goods' cost price to account for overhead expenses and profit.

Manufacturing Cost

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

Fixed Manufacturing Overhead

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance of a manufacturing facility.

Predetermined Overhead Rate

A rate used to allocate overhead costs to products or job orders, based on estimated costs and activity levels.