What Does the Interest-Rate Effect Mean

question 159

Multiple Choice

What does the interest-rate effect mean?

• A)That an increase in the money supply will increase the rate of interest and cause investment to fall.
• B)That a decrease in prices will reduce the rate of interest which will cause investment to increase.
• C)That an increase in the price level will decrease interest rates,and decrease consumption and investment spending.
• D)That an increase in the price level will decrease the demand for money and spending.
• E)That an increase in Real GDP will increase the price level.

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to individual units of production, based on estimated costs.

Direct Materials

These are raw materials that are directly traceable to the manufacturing of a product.

Direct Labour-Hours

The sum of working hours for employees actively participating in the manufacturing procedure.

Direct Materials

Raw materials that are directly traceable and integral to the finished product, and which can be directly allocated to the manufacturing process.