Which of the Following Will Occur as Part of the Automatic

question 36

Multiple Choice

Which of the following will occur as part of the automatic adjustment process in an economy with an inflationary gap?

• A)falling prices
• B)increasing investment
• C)declining government purchases
• D)rising wages
• E)increasing tax rates

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Definitions:

General Ledger Account

A comprehensive set of accounts that provides a complete record of all financial transactions of a company.

Allowance Method

An accounting technique used to estimate and account for potential uncollectable debts or credit sales.

Uncollectible Receivables

Debts owed to a company that are considered unlikely to be paid by the debtor, often written off as bad debts.

Bad Debts Expense

Bad debts expense is the cost to a business of accounts receivable that are not collected because customers are unable to pay.