One Reason Most Central Bankers Do Not Set an Inflation

question 10

Multiple Choice

One reason most central bankers do not set an inflation target of zero is:

• A)It is almost impossible to achieve
• B)They believe it would cause deflation
• C)It would hit the zero nominal-interest-rate bound
• D)None of the answers given is correct

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Definitions:

Variable Overhead Efficiency Variance

Variable overhead efficiency variance is the difference between the actual and budgeted variable overhead cost based on the efficient utilization of resources.

Direct Labor-hours

The amount of labor hours that can be directly attributed to the production process, serving as a basis for allocating manufacturing overhead costs in some costing systems.

Variable Manufacturing Overhead Standards

Pre-set rates used to allocate variable overhead costs to individual units of production based on expected usage criteria, such as labor hours.

Variable Overhead Efficiency Variance

A measure in cost accounting showing the difference between the actual variable overhead incurred and the expected (or standard) variable overhead based on the actual hours worked.