If the Demand for Real Money Balances Is Proportional to Real

question 21

Multiple Choice

If the demand for real money balances is proportional to real income, velocity will:

• A) increase as income increases.
• B) increase as income decreases.
• C) vary directly with the interest rate.
• D) remain constant.

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Definitions:

Efficiency Variances

The difference between the actual amount of resources used in production and the standard amount expected, showing how efficiently resources are being used.

Volume Variances

are differences between the expected (budgeted) volumes of production or sales and the actual volumes, impacting revenue, costs, and profits.

Budget Variance

The difference between budgeted and actual amounts for a particular accounting category.

Volume Variance

The difference between actual and budgeted sales volumes, impacting the expected revenue or costs.