In a Situation of Inflationary Pressure, an Increase in the Overnight

question 12

Multiple Choice

In a situation of inflationary pressure, an increase in the overnight loans rate results in

• A)an increase in real GDP and the price level.
• B)an increase in real GDP, but a fall in the price level.
• C)an increase in real GDP, but no change in the price level.
• D)a rise in the price level, but no change in real GDP.
• E)a fall in the price level and a decrease in real GDP.

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Definitions:

Accounts Payable

The amount of money owed by a company to its suppliers or creditors for goods or services received.

Operating Activities

Transactions and events that are directly related to the primary operations of the company, such as sales and service delivery.

Indirect Method

A cash flow statement preparation approach that adjusts net income for changes in non-cash accounts to calculate cash flow from operating activities.

Gain on Sale

The profit earned from the sale of an asset or investment, calculated as the difference between the sale price and the original purchase price.