A High Rate of Inflation Is Likely to Cause a

question 104

Multiple Choice

A high rate of inflation is likely to cause a

• A)high nominal interest rate.
• B)low nominal interest rate.
• C)low rate of growth of nominal GDP.
• D)decrease in nominal wages.

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Definitions:

Predetermined Overhead Rate

A rate calculated before the period begins, based on the estimated overhead costs and estimated activity base, used to allocate overhead costs to products.

Machine-Hours

An indicator of how much output is generated in manufacturing, determined by the total hours that machinery is in use.

Predetermined Overhead Rate

A rate calculated before the accounting period begins, based on the estimated overhead costs and estimated activity level, used to allocate overhead costs to products or services.

Labor-Hours

A measure of the work performed by employees, typically represented by the number of hours worked.