Use the Following to Answer Questions

question 152

Multiple Choice

Use the following to answer questions:
Figure: A Money Market
-(Figure: A Money Market) Refer to Figure: A Money Market. Holding the money supply constant, which reason might cause the equilibrium interest rate to decrease to r₁?

• A) The inflation rate rises to historically high levels.
• B) Higher payroll taxes cause employers to pay workers cash under the table.
• C) A recession decreases real GDP.
• D) There is a significant increase in the stock market.

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Definitions:

Comprehensive Income

The total change in equity for a reporting period other than from transactions with owners, including all revenues, gains, expenses, and losses.

Equity

The value of an owner's interest in a property or business, determined by subtracting liabilities from assets.

Trading Securities

Marketable securities held by a firm with the intent of short-term trading for profit, which are classified as current assets on the balance sheet.

Accounting Principles

The foundational concepts and guidelines that govern the field of accounting, such as revenue recognition, matching principle, and full disclosure.