If the Amount of Money Demanded Exceeds the Amount Supplied

question 366

Multiple Choice

If the amount of money demanded exceeds the amount supplied, the

• A) demand-for-money curve will shift to the left.
• B) money-supply curve will shift to the right.
• C) interest rate will rise.
• D) interest rate will fall.

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Definitions:

Stock Out Costs

The costs associated with running out of stock, including lost sales, diminished customer loyalty, and operational disruption.

Accounts Payable Period

The Accounts Payable Period is the average amount of time it takes for a business to pay off its suppliers after receiving goods or services.

Operating Cycle

The average period of time required for a business to convert its investments in inventory back into cash through the process of producing goods, selling them, and collecting revenue from customers.

Cash Cycle

The period between the outlay of cash for the purchase of inventory and the collection of cash from customers in a business operation, reflecting the liquidity and efficiency of the company.