The Effect of a Decrease in Interest Rates by the RBA

question 64

Multiple Choice

The effect of a decrease in interest rates by the RBA is likely to be that the:

• A) AD curve will shift left.
• B) AD curve will shift right.
• C) AS curve will shift right.
• D) AS curve will shift left.

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Definitions:

Flexible Budget

A flexible budget adjusts according to the actual levels of activity experienced, allowing for more accurate comparisons of budgeted to actual performance.

Static Budget

A budget that is set for a specific level of activity and does not change or adjust with the actual level of activity achieved.

Fixed Manufacturing Overhead

The set costs involved in producing a product that do not change with the level of production, such as rent, salaries, and utilities.

Master Budget

A comprehensive financial plan comprising various individual budgets covering all facets of an organization's operations.