Suppose the Government Ran a Budget Surplus in 2010 and a Larger

question 43

Multiple Choice

Suppose the government ran a budget surplus in 2010 and a larger surplus in 2011.The loanable funds model would predict that,as a result of the increase in the surplus,

• A)both the government debt and interest rates increased between 2010 and 2011.
• B)both the government debt and interest rates decreased between 2010 and 2011.
• C)the government debt increased and interest rates decreased between 2010 and 2011.
• D)the government debt decreased and interest rates increased between 2010 and 2011.

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Definitions:

ASPE

Accounting Standards for Private Enterprises; a set of accounting standards for private companies in Canada, focusing on simplicity and cost-effectiveness.

Accounts Receivable

Accounts receivable represents money owed to a company by customers for products or services delivered but not yet paid for.

Operating Activities

Activities that relate to a company’s primary business operations, including revenue and expense transactions affecting net income.

Interest

The cost of borrowing money, typically expressed as an annual percentage of the principal loan amount.