What Will Be the Effect of an Excess of Planned

question 105

Multiple Choice

What will be the effect of an excess of planned investment over saving in a private closed economy with unemployed resources?

• A)a decline in the rate of interest
• B)an unintended accumulation of inventories by businesses
• C)a rise in the real GDP
• D)The federal budget will automatically move toward a deficit.

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Definitions:

Credit Sales

Credit sales are transactions where the purchase of goods or services is made on credit, with payment to be made at a later date.

Lenient Credit Terms

Lenient credit terms are more favorable conditions provided by a lender, allowing for longer repayment periods or lower interest rates to facilitate easier repayment for the borrower.

Uncollectible Accounts

Accounts receivable that are considered unlikely to be collected and thus written off as a bad debt expense.

Idle Cash

Idle cash refers to funds that are not currently invested, earning interest, or being used in operations, often representing missed opportunities.