According to the Real Wealth Effect, If You Are Living

question 102

Multiple Choice

According to the real wealth effect, if you are living in a period of rising price levels, the cost of the goods and services you buy ______ and your real income ___________.

• A)decreases; increases
• B)increases; increases
• C)increases; remains the same
• D)increases; decreases

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Definitions:

Supplies Expense

Expenditures related to consumable supplies used in the operating activities of a business during a specific period.

Dividends

Payments made by a corporation to its shareholder members. It's often quoted as the amount each share receives (dividends per share).

Unearned Rent

Income received for rent before the rental period has occurred, recorded as a liability until the period passes.

Adjusted Trial Balance

A listing of all the accounts and their balances after adjustments have been made, used to prepare financial statements.