When the Expected Inflation Rate Increases,the Demand for Bonds ________,The

question 10

Multiple Choice

When the expected inflation rate increases,the demand for bonds ________,the supply of bonds ________,and the interest rate ________.

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

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Definitions:

Periodic Inventory System

An inventory accounting system where the inventory balance is updated and the cost of goods sold is calculated only at the end of each accounting period.

Merchandise Purchases

The acquisition of goods for resale at a profit, a central activity of retail and wholesale businesses.

Lower of Average Cost or Market

An inventory valuation method where inventory is valued at either its average cost or market value, whichever is lower.

Cost-to-retail Percentage

A ratio used in inventory valuation that compares the cost of inventory to its retail price.