When the Bonds Are Sold for More Than Their Face

question 23

Multiple Choice

When the bonds are sold for more than their face value, the carrying amount of the bonds is equal to

• A) face value
• B) face value plus the unamortized discount
• C) face value minus the unamortized premium
• D) face value plus the unamortized premium

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Definitions:

Simple Spending Multiplier

The ratio of a change in output to a change in autonomous spending that initiated the change, representing how spending circulates through an economy.

Marginal Propensity

The portion of additional income that an individual is likely to spend on goods and services instead of saving.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, which can affect purchasing power and inflation.

Aggregate Expenditure Line

A graphical representation of the total spending in an economy, including consumption, investment, government, and net exports, at various levels of income.