Shawn Puts Money into an Account

question 93

Multiple Choice

Shawn puts money into an account.One year later he sees that he has 6 percent more dollars and that his money will buy 5 percent more goods.

• A)The nominal interest rate was 11 percent and the inflation rate was 5 percent.
• B)The nominal interest rate was 6 percent and the inflation rate was 5 percent.
• C)The nominal interest rate was 5 percent and the inflation rate was -1 percent.
• D)The nominal interest rate was 6 percent and the inflation rate was 1 percent.

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Definitions:

Conversion Cost

The sum of direct labor and manufacturing overhead costs, representing the expenses necessary to convert raw materials into finished goods.

Materials

Substances or components that are used in the manufacturing or production process to create goods and products.

Molding Department

A specific section within a manufacturing facility dedicated to the process of shaping materials using rigid frames or models called molds.

Conversion Costs

The combined costs of direct labor and manufacturing overheads, which are incurred to convert raw materials into finished products.