An Automobile Manufacturer Changes from Using Skilled Labour to Using

question 128

Multiple Choice

An automobile manufacturer changes from using skilled labour to using computer-controlled assembly procedures.What impact will the past data have with respect to costs?

• A)Past data is useful in predicting future costs.
• B)Past data is of little or no value in predicting future costs.
• C)Past data is should be used without adjustments to predict future costs.
• D)Past data is representative of future costs.

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Definitions:

Real Risk-Free Rate

The interest rate on a risk-free asset, after adjusting for inflation, indicating the true return on a risk-free investment.

Inflationary Expectations

Anticipations of future inflation that can influence economic behaviors in the present.

Default Risk Premium

The additional amount a borrower must pay to compensate the lender for assuming the risk that the borrower may default on the loan.

Corporate Bond

A debt security issued by a corporation to investors, typically offering interest payments and principal repayment at maturity.