As a Result of the Crowding-Out Effect, Interest Rates _____

question 328

Multiple Choice

As a result of the crowding-out effect, interest rates _____ and private sector borrowing _____.

• A) increase; increases
• B) decrease; increases
• C) decrease; decreases
• D) increase; decreases

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Definitions:

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual products or job orders based on a selected activity base, like direct labor hours or machine hours.

Machine-Hours

A measure of the total time machines are operated within a production process, often used for allocating costs based on machine usage.

Fixed Manufacturing Overhead

Costs that do not change with the level of production, such as rent, salaries, and insurance, related to the production process.

Departmental Predetermined Rates

These are rates used to allocate indirect costs to various departments based on estimated overhead and expected activity.