A Decrease in the Prices of Goods and Services Causes

question 19

Multiple Choice

A decrease in the prices of goods and services causes the demand for funds to _____ and market interest rates should _______.

• A) fall; increase
• B) fall; decrease
• C) rise; increase
• D) rise; decrease

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Definitions:

Interest Expense

This is the cost incurred by an entity for borrowed funds over a period of time, typically expressed as an annual percentage.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including materials and labor.

Dividends Paid

The part of a company's profits paid out to shareholders, typically as cash or shares.

Interest Expense

The cost incurred by an entity for borrowed funds; it is the price paid for the use of borrowed money, or, for corporations, the price paid for the use of borrowed capital.