What Do Many Economists Think Contributed to the Over 13

question 108

Multiple Choice

What do many economists think contributed to the over 13 percent inflation rates experienced by the United States in the 1980s?

• A) The Fed was inflexible in its rule of 3 percent growth.
• B) The Fed did not do enough to increase money supply.
• C) The Fed overstimulated the economy with too much money in the 1970s.
• D) The Fed did not react to the oil shocks of the 1970s.

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Definitions:

Doubtful Accounts

Accounts receivable considered unlikely to be collected, prompting businesses to create allowances for bad debts.

Bad Debts Adjustment

An accounting entry made to account for invoices that are not expected to be collected due to customer default.

Accounts Receivable

Represents the money owed to a company by its customers for goods or services delivered but not yet paid for.

Direct Write-off Method

A method of accounting for bad debts that directly writes off specific debts as they are deemed unrecoverable.