Which of the Following Statements Concerning a Change in Government

question 166

Multiple Choice

Which of the following statements concerning a change in government purchases is true?

• A)The slope of the expenditure line and the magnitude of the AD curve's shift are negatively correlated.
• B)The slope of the expenditure line does not affect the magnitude of the AD curve's shift.
• C)The slope of the expenditure line and the magnitude of the AD curve's shift are positively correlated.
• D)The correlation between the slope of the expenditure line and the magnitude of the AD curve's shift depends negatively on the rate of inflation.
• E)The correlation between the slope of the expenditure line and the magnitude of the AD curve's shift depends positively on the rate of inflation.

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Definitions:

Accounts Receivable

The total amount of money owed to a company by its customers for goods or services provided on credit.

Direct Write-off Method

A method of accounting for bad debts that involves charging unpaid invoices directly to the expense account at the time they are determined to be uncollectable.

Expense

Outflows or other using up of assets or incurring of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major operations.

Asset

Resources owned by a company that are expected to provide future economic benefits, including tangible and intangible items like property, equipment, and trademarks.