If Macaroni and Cheese Is an Inferior Good, Then a Decrease

question 148

Multiple Choice

If macaroni and cheese is an inferior good, then a decrease in income will result in

• A) an increase in the supply of macaroni and cheese.
• B) a decrease in the supply of macaroni and cheese.
• C) a decrease in the demand for macaroni and cheese.
• D) an increase in the demand for macaroni and cheese.

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Definitions:

Closing Entry

A journal entry made at the end of an accounting period to transfer temporary accounts to permanent accounts and prepare the books for the next period.

Real Account

Another term for permanent account in accounting, referring to accounts that are not closed at the end of the accounting period and carry their ending balance into the next period.

Nominal Account

A nominal account is a temporary financial account that shows the incomes, gains, expenses, or losses over an accounting period, and is reset to zero at the beginning of each new period.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, culminating in net income or loss.