Use the Following to Answer Questions

question 375

Multiple Choice

Use the following to answer questions:
-(Figure: Loanable Funds Market III) Use Figure: Loanable Funds Market III.If the government in a closed economy is running a budget balance of zero when it decides to increase defence spending by $200 billion and then finances the spending by selling bonds,the equilibrium interest rate will:

• A) fall to 12%.
• B) rise to 16.5%.
• C) rise to 18%.
• D) rise to 21%.

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Definitions:

Gross Profit

The financial gain made after subtracting the cost of goods sold from the total sales revenue.

Net Sales

Net sales is the revenue from sales of goods or services after subtracting returns, allowances for damaged or missing goods, and discounts.

Inventory Available

The total quantity of goods a company has on hand for sale at any given time, including both finished goods and goods in production.

Current Asset

Assets that are expected to be converted into cash, sold, or consumed within one year or within the company’s normal operating cycle if longer.