When Inflation Rises,the Nominal Interest Rate

question 29

Multiple Choice

When inflation rises,the nominal interest rate

• A)rises,and people desire to hold more money.
• B)rises,and people desire to hold less money.
• C)falls,and people desire to hold more money.
• D)falls,and people desire to hold less money

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Definitions:

Contra-revenue Account

is an account that is deducted from gross revenues to arrive at net revenue, examples include sales returns, allowances, and discounts.

Sales Returns

Transactions where customers return previously purchased merchandise, leading to a debit to the sales returns account and a credit to accounts receivable or cash.

Gross Sales

The gross sales income of a business before subtracting any returns, allowances, or discounts.

Credit Sales

Sales transactions where payment is not received at the time of purchase but is instead deferred to a later date.