Higher Interest Rates ____ the ____ Cost of Holding Currency

question 72

Multiple Choice

Higher interest rates ____ the ____ cost of holding currency and therefore reduce the quantity of currency demanded.

• A)decrease;opportunity
• B)increase;transaction
• C)decrease;transaction
• D)increase;opportunity

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Definitions:

Variable Overhead

Costs that vary with production volume, such as utilities or materials, which do not remain fixed over time.

Cost Driver

A factor that causes the cost of an activity to increase or decrease, such as machine-hours, labor hours, or production volume.

Budget Variance

The difference between the budgeted or planned amount of expense or revenue, and the actual amount incurred or earned.

Variable Overhead

Costs of production that fluctuate with the level of output, such as utility expenses and some types of labor costs, which are not directly tied to the volume of production.