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Ostrovityanka [42]
3 years ago
13

Answer the question on the basis of the following information. Assume that if the interest rate that businesses must pay to borr

ow funds were 20 percent, it would be unprofitable for businesses to invest in new machinery and equipment, so investment would be zero. But if the interest rate were 16 percent, businesses would find it profitable to invest $10 billion. If the interest rate were 12 percent, $20 billion would be invested. Assume that total investment continues to increase by $10 billion for each successive 4 percentage point decline in the interest rate. Refer to the information. Which of the following is an accurate verbal statement of the described relationship?a. There is no regular or dependable relationship between business investment and the interest rate. b. The amount of business investment is unaffected by changes in the interest rate. c. Investment spending by businesses varies inversely with the interest rate. d. Investment spending by businesses varies directly with the interest rate.
Business
1 answer:
kodGreya [7K]3 years ago
8 0

Answer:

c. Investment spending by businesses varies inversely with the interest rate.

Explanation:

The relationship described in the question is known as inverse or negative relationship.

An inverse relationship occurs when two variables move in the opposite direction. That is, as variable A increase, variable B decreases. Conversely, as variable A decreases, variable B increases.  This different from a positive relationship which occurs when two variables move in the same direction. That is, as variable A increase, variable B too increases. Conversely, as variable A decreases, variable B also decreases.

From the question, a continuous increase in total investment by $10 billion as the interest rate falls successively by 4 percentage point is an example of an inverse or negative relationship. From this, it can also be inferred that total investment will continue to fall by $10 billion as the interest rate rises successfully by 4 percentage point.

Therefore, the verbal statement that "investment spending by businesses varies inversely with the interest rate" is an accurate description of the relationship between the investment and the interest rate.

All the best.

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8 0
1 year ago
Which inventory costing method results in the lowest net income during a period of rising inventory​ costs?.
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<h3>Which technique of inventory valuation will result in the lowest net profit?</h3>

The application of LIFO will produce the lowest net income and the greatest estimated cost of goods sold among the three options during periods of inflation.

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LIFO is the inventory cost flow method that yields the lowest income tax liability. A form of inventory cost flow mechanism called last-in-first-out (LIFO) operates under the presumption that the last item acquired will be the first item to be sold.

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7 0
1 year ago
Atkinson Construction assembles residential houses. It uses a job-costing system with two direct-cost categories (direct materia
Oduvanchick [21]

Answer:

1. Compute the

(a) budgeted indirect-cost rate

$40 per labor hour

and (b) actual indirect-cost rate.

$42 per labor hour

Why do they differ?

Because total assembly support costs and labor hours were different.They both were actually lower than expected, but the labor hours were 9% lower while the costs were around 5% lower. That is why the actual rate increased (denominator decreased more than numerator).

2. What are the job costs of the Laguna Model and the Mission Model using (a) normal costing

                                               Laguna Model       Mission Model

assembly-support cost                $38,800               $40,000

and (b) actual costing?

                                              Laguna Model       Mission Model

assembly-support cost                $40,7400               $42,000

3. Why might Atkinson Construction prefer normal costing over actual costing?

The problem with actual costing is that they cannot be budgeted, you can only budget normal costing. Any business has to prepare budgets in order to control how their operations are being carried out and then they need to adjust them to the actual costs incurred.

Explanation:

                                                  Laguna Model       Mission Model

Construction period                 Feb-June 2017       May-0ct 2017

Direct material costs                   $106,550              $127,450

Direct labor costs                         $36,250                 $41,130

Direct labor-hours                             970                      1,000

budgeted indirect cost rate:

assembly-support costs $8,800,000

direct labor-hours 220,000

budgeted assembly-support cost per labor hour = $8,800,000 / 220,000 = $40 per hour

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assembly-support cost                $38,800               $40,000

actual indirect cost rate:

assembly-support costs $8,400,000

direct labor-hours 200,000

actual assembly-support cost per labor hour = $8,400,000 / 200,000 = $42 per hour

                                               Laguna Model       Mission Model

assembly-support cost                $40,7400               $42,000

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3 years ago
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Had to look for the missing options and here is my answer.

The element of sensory memory that is being described above is ICONIC. Iconic memory is part of the visual memory, and this is when someone is able to store visual information. This is stimulated with pictures and images and may be in a form of short term or long term memory. Hope this answer helps.
4 0
3 years ago
Read 2 more answers
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