Suppose That Nicholas Has $50 to Spend on Food and Clothing

question 136

Multiple Choice

Suppose that Nicholas has $50 to spend on food and clothing. If Nicholas now has $100, then it is most likely that he will

• A)increase both food and clothing consumption.
• B)increase food consumption but decrease clothing consumption.
• C)decrease food consumption but increase clothing consumption.
• D)decrease both food and clothing consumption.
• E)not change food or clothing consumption.

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Definitions:

Operating Cycle

The duration it takes for a company to buy inventory, sell products, and collect cash from sales, showing the efficiency of its operations.

Interest-Bearing Note

A debt instrument that pays interest to the holder, usually at a fixed rate, until the principal is repaid.

Face Value

The nominal or original value printed on a financial instrument, such as a bond or stock certificate.

Notes Payable

Notes payable are written agreements where a borrower agrees to pay back the principal amount along with interest to a lender at a future date.