People Will Want to Hold More Money If the Price

question 54

Multiple Choice

People will want to hold more money if the price level

• A)or if the interest rate increases.
• B)or if the interest rate decreases.
• C)increases or if the interest rate decreases.
• D)decreases or if the interest rate increases.

---

Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs (direct material, direct labor, and both variable and fixed manufacturing overhead) in the cost of a product.

Net Operating Income

A company's total earnings from its operations, excluding taxes and interest.

Absorption Costing

A cost accounting procedure that comprises adding up all expenses involved in manufacturing—direct materials, direct labor, and manufacturing overhead, both fixed and variable—to the cost of the product.

Ending Inventory

The total value of all inventory, including raw materials, work-in-progress, and finished goods, at the conclusion of an accounting period.