A Rise in the Interest Rate Tends to

question 99

Multiple Choice

A rise in the interest rate tends to

• A) reduce many kinds of spending
• B) stimulate investment in high-profit industries
• C) cause bond prices to increase
• D) encourage confidence in the Fed's control over the economy
• E) suggest a downturn in the economy is coming within 6 months

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Definitions:

Withdrawals Account

A record of the money taken out of a business by its owner(s) for personal use.

Income Summary

A temporary ledger account used in the closing process to summarize the year's revenues and expenses before transferring the net income or loss to the owner's equity account.

Capital

The financial resources used by a business to fund its operations and growth, including equity and debt.

Income Statement Accounts

Accounts that are included in the income statement, showing revenues and expenses for a specific period.