If Business Fluctuations Are from Demand-Side Forces

question 33

Multiple Choice

If business fluctuations are from demand-side forces,

• A)monetary and fiscal policy will move inversely.
• B)interest rates and budget deficits will move inversely.
• C)unemployment and inflation will move inversely.
• D)unemployment and budget deficits will move inversely.

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Definitions:

Bad Debt Expense

The cost associated with accounts receivable that a company does not expect to collect because customers default on their payments.

Allowance Method

An accounting technique used to estimate and account for potential uncollectible accounts receivable and bad debts.

Uncollectible Receivables

Debts owed to a company that are deemed unrecoverable and are written off as a loss because the debtor is unable to pay.

Allowance for Doubtful Accounts

An estimation of the amount of accounts receivable that may not be collected, which is used as a contra asset to adjust the net value of accounts receivable.