Caroline Has Saved $100,000 for Her Retirement

question 165

Multiple Choice

Caroline has saved $100,000 for her retirement.She earned 4 percent interest on that money during the year 2013.If the inflation rate was 1 percent in 2013,what was Caroline's real interest rate?

• A)$4,000
• B)4 percent
• C)3 percent
• D)1 percent
• E)5 percent

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Definitions:

Absorption Costing

A bookkeeping approach incorporating the total manufacturing expenses, which include the cost of direct materials, wages for labor directly involved in manufacturing, and all overheads, be they variable or fixed, into the product's cost.

Fixed Manufacturing Overhead

Costs associated with the production process that do not change with the level of output, such as rent, salaries, and utility expenses.

Production Volume

The total number of units of a product or service produced over a specific period.

Sales Volume

The total number of units of product sold during a specific period.