Proponents of the Notion of a "Political Business Cycle" Suggest

question 78

Multiple Choice

Proponents of the notion of a "political business cycle" suggest that:

• A) The standardized budget is a better indicator of the state of the economy than the actual budget, for political reasons
• B) Cyclical swings in the economy are produced by the inherent political instability found in capitalist economies
• C) A possible cause of economic fluctuations is the use of fiscal policy by policy-makers for political purposes and goals
• D) There is constant political trading among policy-makers that tends to make the economic policies of state and local governments procyclical

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Definitions:

Labor Rate Variance

The difference between the actual labor rate paid and the standard rate expected, multiplied by the total hours worked.

Labor Efficiency Variance

The variance between the real hours spent producing a good or service and the anticipated standard hours, times the standard wage rate.

Variable Overhead Rate Variance

The difference between the actual variable overhead costs incurred and the standard variable overhead expected for the actual production achieved.

Variable Overhead Efficiency Variance

A measure used in cost accounting to evaluate the efficiency of variable production costs, comparing the actual hours worked to the standard hours expected.