If the Dollars Held for Transactions Purposes Are, on the Average

question 91

Multiple Choice

If the dollars held for transactions purposes are, on the average, spent four times a year for final goods and services, then the quantity of money people will wish to hold for transactions purposes is equal to:

• A) Four percent of nominal GDP
• B) 25 percent of nominal GDP
• C) Nominal GDP multiplied times 4
• D) Nominal GDP divided by 25

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Definitions:

Activity Rate

A measure used in cost accounting to assign overhead costs to products or services, based on the amount of activity (such as machine hours or labor hours) consumed.

Activity Cost Pool

A categorization in cost accounting that aggregates costs incurred for a specific activity, aiding in more accurate product or service costing.

Product Development

The creation of new products or improvements to existing products to meet customer needs or market opportunities.

Activity Rate

The predetermined overhead rate used in activity-based costing to allocate overhead costs to cost objects based on their usage of activities.