The Velocity of Circulation Is

question 209

Multiple Choice

The velocity of circulation is

• A) equal to the price level multiplied by real GDP.
• B) equal to the quantity of money multiplied by nominal GDP.
• C) the average number of times a dollar bill is used in a year to buy the goods and services in GDP.
• D) average quantity of money that exists during a year.

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Definitions:

Bad Debts Expense

An expense recognized on a company’s income statement, representing the amount of accounts receivable that is not expected to be collected due to customers' inability to fulfill financial obligations.

Uncollectibles

Accounts receivable that a company has determined are unlikely to be collected and writes off as a bad debt expense.

Allowance Method

An accounting technique that anticipates and adjusts for potential future bad debts or credit losses.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from revenues.