If Total Liabilities Decreased by $50,000 and Stockholders' Equity Increased

question 115

Multiple Choice

If total liabilities decreased by $50,000 and stockholders' equity increased by $30,000 during a period of time, then total assets must change by what amount and direction during that same period?

• A) $80,000 decrease
• B) $20,000 decrease
• C) $20,000 increase
• D) $80,000 increase

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Definitions:

Nominal Interest Rate

The stated interest rate on a loan or investment, not adjusted for inflation.

Inflation Rate

The rate expressed in percentage terms by which the overall price level of goods and services increases, leading to a decrease in purchasing power.

Real Rate of Interest

The interest rate adjusted for inflation, reflecting the true cost of borrowing and the real yield to lenders.

Investment-Demand

The desire or willingness to allocate resources towards investment goods that are expected to yield returns in the future.