Which Statement Is True

question 235

Multiple Choice

Which statement is true?

• A)The expected rate of profit is very high during depressions.
• B)The best environment for most investment projects is a high rate of interest and a low marginal efficiency of capital.
• C)The higher the marginal efficiency of capital,the more likely an investment project will be carried out.
• D)None is true.

---

Definitions:

Period Cost

Expenses that are not directly tied to the production process and are instead expensed in the period in which they occur.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs.

Variable Production Costs

Costs that vary directly with the level of production output, such as raw materials and direct labor.

Absorption Costing

An accounting method that includes all manufacturing costs, both variable and fixed, in the cost of producing each unit of a product.