Identify the Correct Statement About Changes in Money Supply

question 31

Multiple Choice

Identify the correct statement about changes in money supply.

• A)A decrease in money supply causes interest rates to fall.
• B)A decrease in money supply causes investment spending to increase.
• C)A decrease in money supply causes gross domestic product to increase.
• D)A decrease in money supply causes investment spending to decrease.
• E)A decrease in money supply causes aggregate expenditure to increase.

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Definitions:

Weighted-Average Method

An inventory costing method that averages out all costs of inventory available for sale during the period.

Process Costing System

An accounting method used where similar goods are produced in a continuous process, distributing costs over the units produced, making it easier to ascertain per unit cost.

Weighted-Average Method

A method of inventory costing that assigns a weighted average cost to each item in inventory, used in both perpetual and periodic inventory systems.

Process Costing System

A costing methodology used in manufacturing where costs are assigned to batches of products rather than individual items, suitable for homogeneous products.