An Instrument Rule Is Based on ________ of the Economy

question 12

Multiple Choice

An instrument rule is based on ________ of the economy while a targeting rule is based on ________ of the economy.

• A) a forecast; the previous state
• B) the current state; the previous state
• C) a forecast; the current state
• D) the current state; a forecast
• E) the previous state; the current state

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within a year or within the business's normal operating cycle.

Retained Earnings

The part of the net earnings not paid out as dividends to shareholders but instead retained by the business for reinvestment purposes or debt repayment.

Cumulative Earnings

The total amount of net income a company has earned over its existence, after dividends and other distributions are subtracted.

Accounting Equation

A fundamental principle representing the relationship among assets, liabilities, and owner's equity (Assets = Liabilities + Owner's Equity).