All Else Equal, a Decrease in the Rate of Inflation

question 31

Multiple Choice

All else equal, a decrease in the rate of inflation ________ planned spending and ________ short-run equilibrium output.

• A)increases; increases
• B)decreases; increases
• C)increases; decreases
• D)decreases; decreases

---

Definitions:

Permanent Accounts

Accounts that carry their ending balances over into the next accounting period; these include asset, liability, and equity accounts.

Prepaid Rent

Prepaid Rent represents payments made in advance for rent, which is recorded as an asset on the balance sheet and expensed over time as it is used.

Utilities Expense

Costs incurred by a business for basic services such as electricity, gas, water, and sewerage, recognized in the accounting period in which they are incurred.

Sales Revenue

The total amount of money generated from selling goods or services before any costs or expenses are deducted.