The "No - Markets Fail Often" Camp Argues That

question 43

Multiple Choice

The "No - Markets Fail Often" camp argues that

• A) interest rates are more important than expectations for business investment decisions.
• B) most shocks are external to the economy.
• C) supply shocks are more important than demand shocks for explaining business cycles.
• D) business expectations are quickly changeable.
• E) government is part of the problem of business cycles.

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Definitions:

Direct Labour Hours

The total number of hours worked by employees directly involved in the production of goods or services.

Labour Efficiency Variance

The difference between the actual labor hours used and the standard labor hours expected to produce a certain level of output.

Standard Labour Rate

The predetermined or expected cost per unit of labor, used in budgeting and cost control.

Variable Overhead Efficiency Variance

The difference between the actual level of activity (direct labor-hours, machine-hours, or some other base) and the standard activity allowed, multiplied by the variable part of the predetermined overhead rate.