What Is the Nominal Rate of Interest Given a Real

question 21

Multiple Choice

What is the nominal rate of interest given a real rate of interest of 5% and an inflation rate of 7%?

• A) 12.0%.
• B) 2.0%.
• C) 12.35%.
• D) 1.90%.

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Definitions:

Predetermined Overhead Rates

Rates used to allocate overhead costs to products or job orders, based on estimated costs and activity levels.

Direct Labor-Hours

The sum of hours contributed by workers directly participating in the creation of a product or the execution of a service.

Variable Manufacturing Overhead

Costs in manufacturing that vary directly with the level of production output, such as utilities and raw materials.

Fixed Manufacturing Overhead

Costs associated with manufacturing that remain constant regardless of the level of production, such as rent and salaries of managerial staff.