If the Fed Conducts an Open Market Sale of Bonds,which

question 92

Multiple Choice

If the Fed conducts an open market sale of bonds,which of the following will happen?

• A) The interest rate will decrease,the aggregate expenditure line will shift upward and the aggregate demand curve will shift rightward
• B) The interest rate will decrease,the aggregate expenditure line will shift downward and the aggregate demand curve will shift rightward
• C) The interest rate will increase,the aggregate expenditure line will shift downward and the aggregate demand curve will shift leftward
• D) The interest rate will decrease,the aggregate expenditure line will shift upward and the aggregate demand curve will shift leftward
• E) The interest rate will increase,the aggregate expenditure line will shift downward and the aggregate demand curve will shift rightward.

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account that reduces total accounts receivable to reflect the estimated amount of credit sales that may not be collected.

Credit Balance

A positive balance within an account, indicating that a company or individual has received more in deposits than it has spent.

Credit Sales

Sales made by a business that do not require immediate payment, but rather are paid for by the buyer at a later date.

Analysis of Receivables Method

A technique used in accounting to estimate the amount of receivables that will likely remain uncollectable.