As the Medicare Program Is Expanded to Cover the Cost

question 166

Multiple Choice

As the Medicare program is expanded to cover the cost of prescription drugs for the elderly, other things constant, this will lead to

• A) an increase in demand and higher prices for prescription drugs.
• B) an increase in demand and lower prices for prescription drugs.
• C) reduction in demand and lower prices for prescription drugs.
• D) reduction in demand and higher prices for prescription drugs.

---

Definitions:

Contra Expense Accounts

Accounts that are used to offset or reduce expense accounts on the income statement, resulting in the net amount of expense being reported.

Normal Credit Balances

Accounts on a company's balance sheet that are expected to have credit balances, such as liabilities, equity, and revenue.

Periodic Inventory System

An inventory accounting system where updates are made on a periodic basis, typically at the end of an accounting period, rather than continuously.

Perpetual Inventory System

An inventory management method where records of inventory quantities are updated on a continuous basis as sales and purchases are made.