The Political Business Cycle Implies All of the Following EXCEPT

question 132

Multiple Choice

The political business cycle implies all of the following EXCEPT that:

• A)central banks should be independent of politics.
• B)discretionary fiscal policy should be avoided.
• C)politicians pumping up the economy in an election year make the economy less stable.
• D)monetary policy is ineffective if inflation is high.

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Definitions:

Direct Materials

Raw materials that are directly traceable and allocable to the production of specific goods or services.

Raw Materials Price Variance

The difference between the actual cost of raw materials and the standard cost multiplied by the actual quantity used.

Raw Materials Quantity Variance

The difference between the actual quantity of raw materials used in production and the estimated quantity, which can indicate inefficiencies or savings in material usage.

Materials Quantity Variance

The variance between the real amount of materials consumed in the manufacturing process and the anticipated amount, with this difference being multiplied by the per unit standard cost.